Eternal Limited, the parent company of Zomato and Blinkit, experienced a significant decline in its share price after releasing its Q4 FY25 earnings report. The stock slid over 5% in trading as investors reacted to a 34% drop in net profit compared to the previous quarter.
This decline was despite a notable increase in revenue, which rose by 63.8% year-on-year to Rs 5,833 crore.
The company’s net profit for the fourth quarter stood at Rs 39 crore, marking a substantial year-on-year decline of 77.7% from Rs 175 crore in the same period last year. This drop in profitability was primarily attributed to a 68% increase in total expenses, which reached Rs 6,104 crore. The higher costs were largely due to increased investments in Blinkit, the company’s quick commerce arm, and elevated infrastructure spending across segments.
Despite the profit decline, Eternal’s revenue growth was robust, driven by a strong performance from its food delivery business and Blinkit. The food delivery segment saw a stable contribution margin, while Blinkit’s revenue surged 122% year-on-year to Rs 1,709 crore.
However, Blinkit’s aggressive expansion led to wider losses, with an adjusted EBITDA loss of Rs 178 crore in Q4 FY25.
Market sentiment around Eternal remains mixed, with some brokerages maintaining a “buy” recommendation despite the Q4 profit miss. Analysts point to the company’s strategic growth initiatives and potential for long-term profitability. However, concerns over rising competition and higher expenses continue to impact investor confidence.
Overall, while Eternal’s Q4 results were disappointing in terms of profitability, the company’s revenue growth and strategic investments suggest a promising future outlook.
As the company navigates through competitive market dynamics, its ability to balance growth with profitability will be crucial for sustaining investor interest.