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Informist, Monday, Jul. 21, 2025

By Rajesh Gajra

NEW DELHI – As the company moves its quick commerce business, primarily comprising Blinkit's operations, to an inventory-led model over the next 2-3 quarters, the revenue from the vertical will become "very similar" to the net order value as the company will own the inventory, the management of Eternal Ltd. said in a post-earnings conference call with analysts and investors Monday. But the contribution margins, in terms of definition and calculation, will not change, it said. On the gross margin number, which will arise as a result of the move, the management said it will decide whether to disclose it in the next quarter.

The switch to an inventory-led model has become possible for Eternal because it has now become an Indian-owned and -controlled company, which allows it to hold food inventory as per the country's legal framework. Recently, the company got shareholder approval for a cap on foreign shareholding at 49.5%. As on Jun. 30, the foreign shareholding in Eternal was around 43%, the company said in an earnings-related shareholder letter Monday.

Till now, in its quick commerce business, Eternal was selling food and staple items to its non-restaurant Hyperpure customers, who were then selling on the company's quick commerce platform. Hyperpure is Eternal's business-to-business segment of the company providing supplies to restaurants and non-restaurant customers.

Hyperpure revenue will decrease on account of scaling down of the non-restaurant business, the company said in the letter to shareholders. On the other hand, quick commerce revenue will increase, it said.

In the June quarter, the quick commerce net order value rose 2.3 times to INR 92.03 billion while the revenue rose 2.6 times to INR 24.00 billion, as per the company's shareholder letter. The switch to an inventory model will also result in net working capital in the quick commerce business increasing on account of inventory ownership. There will be a corresponding decrease in the net working capital in the Hyperpure business, the company said.

In response to an analyst's query about how much of Hyperpure's business is restaurant and non-restaurant, the management said it will be around the same as disclosed in the shareholder letter following the March quarter results. The revenue from the non-restaurant business in the Hyperpure segment in the March quarter was INR 11.42 billion, or 62.1% of the total segment revenue.

Responding to questions on the rising competitive heat in the quick commerce business with new entrants, the management said Eternal will respond to the market situation and make sure it maintains its leadership position by giving the best service to its customers. The company is focused more on revenue growth than margin expansion in the near term, it added.

To a question on whether quick commerce gross order value will taper off given the 2,000-store footprint Eternal is likely to achieve by December, the management said the growth momentum is currently strong. As the company builds more infrastructure in the quick commerce business and tries to get to 3,000 stores, growth rates will likely be high, it said.

"Beyond that, I think it's very hard for us to comment on how large this market could be," the management said. Future growth will also depend on how deep the company can go in certain categories that are small today and how sustainable their economics is, it said.

In the recent rapid expansion of quick commerce stores, while the number of stores has risen, the expansion in area served has been slower. The management said the metric it looks at is the "polygon", or the area under existing coverage. When the company looks at existing polygons versus new polygons where it opens new stores, "most of the current growth has come from existing polygons".

Existing polygons have also seen the addition of new stores. In the June quarter, "less than 5% of the overall growth actually came from the expansion areas that we were not serving earlier," the management said.

Of the 16.9 million average monthly transacting customers in the company's quick commerce business in the June quarter, the overlap with food delivery customers was "not very high", the Eternal management said. The number of unique customers in the quick commerce vertical is increasing, it added.

On its food delivery business, the management said there has been a slight slowdown in the growth of the number of customers transacting on its Zomato application and the number of opens that "we're seeing on the app during the year". However, it expects the number of transacting customers in the food delivery business to grow as customers return to the app.

Monday, shares of the company closed at INR 271.70 on the National Stock Exchange, up 5.6%.  End

Edited by Rajeev Pai

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