Eternal Q2: Shares Drop 4% Despite 183% Sales Jump

Eternal share price: Following the results’ announcement, the stock surged 4% to reach a record high. From then, the stock fell precipitously by 8%.

Despite reaching an all-time high earlier in the day, Eternal’s shares fell 4% to settle in the deep red on October 16. This follows the announcement of Zomato’s parent company‘s second-quarter FY26 results.

Throughout the day, there was significant fluctuation in the shares. Following the results’ announcement, the stock surged 4% to reach a record high of Rs 368.45 per share. From then, the price fell precipitously by 8% to settle at Rs 340.50 a share.

Results for Eternal Q2:

For the second quarter of FY26, Eternal declared a net profit of Rs 65 crore. The net profit of Rs 176 crore in Q2 FY25 is a YoY decline of 63 percent. However, operating revenue jumped 183 percent year over year to Rs 13,590 crore. At Rs 13,813 crore, expenses too increased by 189% year over year.

The following are some potential causes of the steep drop in share price:

In the foreseeable future, a slow growth rate in meal delivery is likely:

According to Eternal Founder Deepinder Goyal, Zomato’s recovery growth has been slower than anticipated in Q2 FY26. He went on to say that the company anticipates a gradual acceleration of growth in the near future. “While we are working on business inputs (making restaurant food more affordable and accessible for customers), we are also continuously battling a number of headwinds, such as India’s generally soft discretionary consumption, the impact of rapid commerce growth, and increasingly unpredictable weather (prolonged rains, extreme heat), which continue to weigh on near-term growth,” he continued.

It is possible that management’s hint at reduced discretionary spending and prospects of slower rebound growth tempered market optimism.

Losses at Blinkit decreased less than anticipated:

Blinkit, Zomato’s fast commerce division, recorded an EBITDA loss of Rs 156 crore in Q2 FY26, which was larger than the Rs 8 crore loss in the same time the previous year due to the company’s rapid development of its dark stores. However, the adjusted EBITDA loss was less than the Rs 162 crore reported in Q1 FY26 on a sequential basis.

Albinder Dhindsa, the founder of Blinkit, said, “Although absolute losses fell, the reduction in loss/margin expansion was below our expectations.” According to him, this was mostly due to the company’s investments in increasing growth and NOV market share during the quarter by passing on efficiency gains to customers, increasing marketing expenditures to attract new clients, speeding up the expansion of the store network, and increasing capacity through supply chain and warehousing expansion.

“We continue to grow with a long-term perspective of the company, and this has no effect on our long-term forecast on margins. If we have to pick between short-term margin compromise and high-quality sustained development, we can select the former because of our robust balance sheet,” he said.

GST changes that affect the cost of food delivery:

According to Zomato, food delivery costs would increase as a result of the most recent GST changes implemented in India. “The delivery fee that clients pay for food delivery orders now includes 18% GST. To be clear, the platform cost is already subject to 18% GST and is unaffected by this change, therefore it affects around 25% of our purchases when shipping is not free. Since we passed this tax burden on to clients, it has had a little detrimental effect on the company’s development,” said Akshant Goyal, CFO of Eternal.

However, he pointed out that Blinkit shipping fees are unaffected by the amendments. He went on to say that they would assist boost demand by lowering the average GST on Blinkit usual basket by around three percentage points.

When rapid commerce switches to inventory ownership, Hyperpure income drops:

During the reviewed quarter, Hyperpure’s sales fell 31% year over year and 55% quarter over quarter to Rs 1,023 crore. According to our previous letter, Hyperpure’s non-restaurant company was scaled down as a result of the move to inventory ownership in rapid commerce, which caused the drop. According to Goyal, the quarter’s total adjusted EBITDA loss was just Rs 5 crore, compared to Rs 18 crore in Q1 FY26.

This is not a like-to-like comparison because Quick Commerce’s business model has shifted to primarily inventory ownership (as opposed to marketplace earlier), where revenue now includes the full monetary value of goods sold according to Ind AS (and not just the marketplace commission). Adjusted revenue increased 172% YoY (85% QoQ) to Rs 13,968 crore. After subtracting the cost of products sold in the case of own inventory sales in fast commerce and removing the revenue from Hyperpure’s non-restaurant operation, the like-for-like adjusted revenue increase was 65% YoY (22% QoQ), he said.

Modification to Blinkit business strategy:

Blinkit is changing its approach to working with platform merchants, moving toward a business model in which it will sell directly to consumers and keep inventory on file. Moneycontrol said, citing sources acquainted with the matter, that the Zomato-owned rapid commerce firm went into operation on September 1.

CFO Akshant Goyal provided an update on the matter, stating: “With the exception of a few categories where we do not currently intend to own inventory for a variety of reasons, we have moved the majority of the company to the own inventory model. Consequently, over 80% of the NOV was on our own inventory in Q2 FY26; this percentage is anticipated to reach a constant level of almost 90% in the next quarter. There was no business interruption throughout the seamless changeover. Bravo to the team for completing this so quickly, amid a quarter in which we had our fastest growth rate in the previous 10 quarters and during which we were dealing with persistent rains nationwide for a considerable amount of time.”

According to Informist, 73 percent of the current consolidated sales have switched to a new operating model as a result of Eternal’s shift in Blinkit business model, rendering the total financial performance incomparable with previous quarters. The change from the previous commission-based model to the inventory-based approach include the own cost of products in the income, which was not the case before, in addition to having an impact on Eternal’s earnings and depreciation expenses, it said.

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