Summary
Eternal Limited - Q3 FY26 Earnings Call Summary Wednesday, January 21, 2026 5:00 PM IST
Event Participants
Executives 3 Akshant Goyal (CFO), Albinder Singh Dhindsa (Founder & CEO, Blinkit / Group CEO), Kunal Swarup (Head, Corporate Development)
Analysts 9 Abhisek Banerjee, Ankur Rudra, Garima Mishra, Gaurav Malhotra, Gaurav Ratera, Jignanshu Gor, Manish Adukia, Nikhil Choudhary, Sachin Salgaonkar, Swapnil Potdukhe, Vijit Jain
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Quick Commerce (Blinkit) Adjusted EBITDA | Breakeven | Reached breakeven this quarter; improvement of +130 bps QoQ despite irrational competition. |
| Blinkit Contribution Margin | - | Expanded +90 bps QoQ; driven by cost efficiencies, operating leverage, and product mix despite a -20 bps drop in take rates. |
| Blinkit Net Store Additions | 211 stores | Net additions for the quarter; total store count driving assortment expansion rather than just throughput. |
| Blinkit Store Throughput | -6% QoQ | Declined due to GST transition impacts and a shift toward long-tail assortment expansion. |
| Going-out (District) FY30 GOV Guidance | $3 billion | Maintained guidance; implies ~30% CAGR through market share gains in movies and events. |
| Net Working Capital (Quick Commerce) | ~18 days | Management remains comfortable with this range while solving for 40%+ ROCE. |
| Food Delivery Growth | ~20% YoY | Expected to trend slowly toward this level; driven by 50-100% growth in select large cities. |
Geographic & Segment Commentary
- Quick Commerce (Blinkit): Achieved adjusted EBITDA breakeven while maintaining market share in metros despite “irrational” competition (zero delivery fees/low MOVs from peers). Focus has shifted toward assortment expansion, with 90% of the business now transitioned to an inventory-led model.
- Going-out (District): Experienced a jump in losses due to the unbudgeted rollout of the “District Pass” membership program. Management expects losses to reduce sequentially, targeting breakeven within 4-6 quarters.
- Bistro: Emerging segment showing early signs of product-market fit by filling cuisine gaps with high-quality, snacky food at lower ASPs. Management is cautious on expansion until economic viability matches Blinkit’s trajectory.
Company-Specific & Strategic Commentary
- Inventory Model Transition: 90% of Blinkit business is now inventory-led; management expects a total 1% margin accretion from this move, with 0.5% already realized and the remainder due in 6-9 months.
- Store Automation & Capex: Capex per store is expected to increase due to larger store formats, deeper geographic penetration, and investments in supply chain automation to improve productivity.
- Leadership Transition: Albinder Singh Dhindsa appointed as Group CEO; however, management clarified that operationally nothing changes, with Dhindsa continuing to lead Blinkit and Goyal/Goyal remaining deeply involved.
- ESOP Pool Management: Deepender Goyal’s unvested shares (3.3 crore) will return to the employee pool, extending the runway for future grants without the need for immediate shareholder dilution.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Quick Commerce Growth | 100% YoY | Targeted for the next 1-2 years, contingent on competition not remaining irrational; likely requires 3,500-4,000 stores. |
| Quick Commerce Margin | 5% - 6% of NOV | Long-term steady-state target; confidence supported by specific cities already operating at 5% Adjusted EBITDA. |
| Going-out Profitability | Breakeven | Expected within 4-6 quarters (by mid-FY27/early FY28) as District Pass investments compound. |
| ROCE (Quick Commerce) | 40%+ | Primary framework for assessing capex and working capital efficiency. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | Management noted “irrational” behavior from peers (waiving delivery fees), which led Blinkit to tactically drop charges in certain markets, potentially impacting near-term take rates. |
| Regulatory (Labor Code) | New social security rules for gig workers may increase costs; management plans to either absorb these or pass them to customers once rules are operationalized. |
| Throughput Volatility | Assortment expansion into long-tail categories may temporarily dilute average store throughput (orders per day) compared to high-velocity grocery SKUs. |
Q&A Highlights
Competition & Pricing
- Question: Where is competition showing up if margins are expanding? (Manish Adukia)
- Answer: Competition impacts the pace of growth and outcomes; while market share was sustained, delivery charges were lowered last week in specific markets to respond to peer freebies. (Akshant Goyal)
Store Throughput & Assortment
- Question: Why is store throughput down 6% despite better store vintage? (Ankur Rudra)
- Answer: Expansion is currently focused on assortment (long-tail SKUs), which has lower turnover than core SKUs, plus a 3% impact from GST changes. (Akshant Goyal/Kunal Swarup)
Strategic Growth
- Question: Why is 100% growth guidance now contingent on competition? (Nikhil Choudhary)
- Answer: Current competitive behavior is focused on taking share rather than expanding the market size, which creates pressure on growth rates. (Albinder Singh Dhindsa)
Going-out Strategy
- Question: Why did losses jump in the “Going-out” segment? (Swapnil Potdukhe)
- Answer: Unexpected investment in the “District Pass” membership to drive multi-category usage; losses will trend down from here toward breakeven in 4-6 quarters. (Akshant Goyal)
Key Takeaway
Eternal Limited achieved a significant milestone in Q3 FY26 with Blinkit reaching Adjusted EBITDA breakeven, supported by a 90 bps expansion in contribution margins despite “irrational” competitive pressure on delivery fees. While Blinkit’s store throughput saw a 6% QoQ dip due to GST transitions and long-tail assortment expansion, management remains committed to 100% YoY growth over the next two years, targeting a 3,500-4,000 store footprint. The “Going-out” business faced higher losses this quarter due to the tactical launch of District Pass, but it is expected to reach profitability by FY27. Strategic focus remains on maintaining a 40%+ ROCE and transitioning fully to an inventory-led model for Blinkit to capture an additional 50 bps in margin. Despite the cautious tone regarding near-term competitive volatility and potential labor code impacts, Eternal maintains its long-term guidance of 5-6% steady-state margins for quick commerce.
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