Summary
Eternal Limited - Q3 FY26 Earnings Call Summary Wednesday, January 21, 2026, 6:00 PM IST
Event Participants
Executives 3 Akshant Goyal (CFO), Albinder Singh Dhindsa (Founder & CEO, Blinkit), Kunal Swarup (Head, Corporate Development)
Analysts 8 Abhisek Banerjee, Ankur Rudra, Garima Mishra, Gaurav Malhotra, Gaurav Rateria, Jignanshu Gor, Manish Adukia, Nikhil Choudhary, Sachin Salgaonkar, Swapnil Potdukhe, Vijit Jain
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Blinkit Contribution Margin | 4.7% | +90 bps QoQ; Driven by operating leverage and cost efficiencies below gross profit despite 20 bps take rate compression. |
| Quick Commerce EBITDA | Breakeven | Reached breakeven this quarter; Management maintains 5-6% long-term Adjusted EBITDA margin guidance. |
| Store Throughput (NOV/Store/Day) | ~₹6.21 lakh | -6% QoQ; Attributed to rapid assortment expansion into long-tail SKUs and GST transition impacts. |
| Net Store Additions | 211 stores | Brought total count to nearly 1,200; Focus shifting toward larger store formats and automation. |
| Net Working Capital (NWC) | ~18 days | Maintained within the target range; Management solving for 40%+ ROCE. |
| Going-out (District) Growth | 20% YoY | Growth attributed to market share gains in events/movies; currently trailing target 30% CAGR. |
| Food Delivery Growth | ~20% YoY | Management expects YoY growth to trend slowly toward 20% mark as demand normalizes. |
Geographic & Segment Commentary
- Quick Commerce (Blinkit): Reached EBITDA breakeven while maintaining market share in metros despite “irrational” competition. Strategic focus has shifted toward assortment expansion and automation, leading to larger average store sizes. While Tier 2/3 metrics differ headline-wise, contribution-level economics remain similar to Tier 1 cities.
- Going-out (District): Experienced increased losses this quarter due to the unbudgeted launch of the “District Pass” membership program. Management views this as a strategic investment to drive multi-category usage, targeting breakeven within 4-6 quarters. Growth is expected through market share gains in under-indexed categories like events and movies.
- Bistro: Early signs of product-market fit observed with high customer retention for “quick snacky” food. The segment fills a cuisine gap that does not cannibalize the core food delivery business. Expansion remains cautious until profit visibility matches the Blinkit trajectory.
Company-Specific & Strategic Commentary
- Inventory Model Shift: 90% of the business has transitioned to an inventory model, contributing 50 bps to margin accretion this quarter. An additional 50 bps is expected over the next 6-9 months, totaling a 1% structural margin benefit.
- Leadership Transition: Albinder Singh Dhindsa transitioned to Group CEO while remaining the operational head of Blinkit. Deepinder Goyal remains fully involved in the long-term building of “Eternal,” contradicting any immediate plans for an executive exit.
- Automation & Capex: Capex per store is projected to increase due to investments in supply chain automation and larger warehouse footprints (Megapods) to support expanding assortments.
- ESOP Pool: Deepinder Goyal’s unvested shares (3.3 crore) will return to the employee pool. This expands the total pool to ~23 crore shares, providing a long runway for performance-based grants without immediate dilution.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Blinkit Growth | 100% YoY | Contingent on “rational” competitive intensity and the ability to scale to 3,500-4,000 stores. |
| District NOV | $3 billion by FY30 | Implies ~30% CAGR; expected to be driven primarily by market share gains rather than just industry growth. |
| Adjusted EBITDA Margin | 5% - 6% of NOV | Long-term target for Quick Commerce; already achieved in select mature cities. |
| District Profitability | Breakeven in 4-6 quarters | Sequential reduction in losses expected after the initial District Pass investment surge. |
Risks & Constraints
| Risk | Context |
|---|---|
| Irrational Competition | Competitors are using low MOVs and zero delivery fees to gain share. Management warned this could impact the pace of margin expansion and store rollout plans. |
| Regulatory Changes | New labor codes regarding social security for gig workers and gratuity for contract labor pose potential cost risks. Management expects to either absorb these or pass them to consumers. |
| Store Throughput Dilution | Rapid assortment expansion into slower-moving, high-ASP items is currently diluting the orders per store per day metric. |
Q&A Highlights
Competitive Intensity
- Question: Where is competition showing up if you are still growing 130% YoY and expanding margins? (Manish Adukia)
- Answer: Competition is impacting the “outcomes we could have had.” While market share was sustained, tactical responses like dropping delivery charges in specific markets were necessary to counter “irrational” freebies from peers (Akshant Goyal).
Store Economics & Capex
- Question: Why is capex per store increasing despite fewer additions? (Ankur Rudra)
- Answer: This is a function of investing in warehousing infrastructure, automation to increase productivity, and a general trend toward larger square footage per store to house broader assortments (Akshant Goyal/Albinder Dhindsa).
Inventory Model Benefit
- Question: Will the inventory model shift provide more than 1% margin benefit? (Sachin Salgaonkar)
- Answer: No, the total benefit is capped at 1%. We have realized 0.5% this quarter, and the remaining 0.5% will accrue over the next two to three quarters (Akshant Goyal).
Market Growth vs. Share
- Question: Why did the 100% growth guidance become contingent on competition? (Nikhil Choudhary)
- Answer: Current competitive intensity is not expanding the total market size but rather fighting for existing share. In such a “non-market-building” environment, growth becomes more expensive and harder to predict (Albinder Dhindsa).
Key Takeaway
Eternal Limited achieved a significant milestone in Q3 FY26 by reaching EBITDA breakeven in its Quick Commerce (Blinkit) and Hyperpure segments. The quarter was characterized by a 90 bps expansion in Blinkit’s contribution margin to 4.7%, even as it faced aggressive competition that necessitated tactical delivery fee cuts. Strategically, the company is doubling down on “Going-out” via the District Pass and shifting 90% of its operations to an inventory-led model to capture structural efficiencies. Despite a 6% QoQ dip in store throughput due to assortment expansion and GST transitions, management remains confident in a $3 billion NOV target for the District business by FY30. The forward outlook remains optimistic but cautious, as achieving 100% YoY growth in Quick Commerce is now explicitly tied to “rational” competitive behavior and successful scaling to 4,000 stores. Investors should monitor the impact of new labor codes and the sustainability of margins as competition for the online buying pie intensifies.
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