Why Has Zomato's Parent Company Eternal Experienced a 90% Drop in Q1 Net Profit?
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Synopsis
Eternal, Zomato's parent firm, reported a shocking 90% drop in Q1 net profit while showing significant revenue growth. Despite challenges, the company is optimistic about future growth and has plans for expansion. Dive into the details of this financial report and its implications for the food delivery giant.
Key Takeaways
- Eternal reported a 90% decline in net profit for Q1 FY26.
- Revenue increased by 70% to Rs 7,167 crore.
- Adjusted EBITDA dropped by 42% to Rs 172 crore.
- Blinkit improved its margins despite ongoing investments.
- Future growth is projected to exceed 15% in FY26.
New Delhi, July 21 (NationPress) Eternal, the parent firm of the online food delivery service Zomato, revealed on Monday a staggering 90% year-on-year decline in its consolidated net profit, reporting Rs 25 crore for Q1 FY26, down from Rs 253 crore in the same period last fiscal year (Q1 FY25).
On a month-on-month basis, Zomato experienced a 35.89% decrease in net profit, dropping from Rs 39 crore in Q4 FY25, as stated in their stock exchange filing.
The operator behind Zomato and Blinkit saw its operational revenue reach Rs 7,167 crore, marking an increase of approximately 70% from Rs 4,206 crore a year prior.
However, on the profitability side, the consolidated Adjusted EBITDA fell by 42% year-on-year to Rs 172 crore in Q1 FY26, primarily due to ongoing investments in quick commerce and dine-out services, as detailed in the company’s letter to shareholders.
This decrease was “partly offset by an enhancement in food delivery Adjusted EBITDA margin (as a percentage of net order value) to 5.0% from 3.9% a year ago,” the report noted.
In the quick commerce sector, Blinkit saw a margin improvement from -2.4% of net order value in Q4 FY25 to -1.8%, despite ongoing investments in new store openings and seasonal challenges.
“This quarter, we added 243 new Blinkit stores, bringing our total to 1,544 stores by the end of the quarter. We are on track to reach 2,000 stores by December 2025,” the company announced.
The net order value of its B2C operations surged 55% year-on-year (and 16% quarter-on-quarter) to Rs 20,183 crore in Q1 FY26.
“This marks the first quarter where our quick commerce net order value surpassed food delivery net order value for the entire quarter. On an annualized basis, we are nearing $10 billion of annual net order value across our B2C divisions, with quick commerce now being our largest B2C segment, accounting for almost half of this annualized net order value,” Eternal stated.
CEO Deepinder Goyal remarked that “the year-on-year growth may have reached its lowest point as we emerge from the demand slowdown that began in late 2024.”
“For FY26, it seems unlikely that the business will achieve over 20% net order value growth, but we should exceed 15% and aim for 20% year-on-year growth in FY27,” Goyal added.
Moving forward, the company will focus solely on disclosing net order value (NOV) and will cease reporting gross order value (GOV), stating, “we believe NOV is a more accurate indicator of growth in our B2C businesses, including food delivery.”
Earlier this month, Eternal appointed Aditya Mangla as CEO of its food ordering and delivery business for a two-year tenure.
“I am incredibly excited to see how Aditya shapes the future of Zomato in the coming two years, until it’s time to pass the baton,” Goyal expressed in the shareholders’ letter.
Point of View
It's crucial to approach Eternal's recent earnings report with a balanced lens. While the dramatic decline in profit is alarming, the accompanying revenue growth and future expansion plans suggest resilience and potential for recovery in the evolving landscape of food delivery services.
NationPress
07/09/2025
Frequently Asked Questions
What caused Eternal's profit drop?
Eternal's profit drop was primarily due to ongoing investments in quick commerce and dine-out services, which outpaced earnings.
How much did Zomato's revenue increase?
Zomato's revenue from operations increased by approximately 70%, reaching Rs 7,167 crore.
What is the future outlook for Eternal?
Eternal aims for over 15% net order value growth in FY26 and is optimistic about reaching 20% in FY27.
What changes did Eternal announce regarding financial reporting?
Eternal will now focus on net order value (NOV) as a key growth metric, discontinuing the reporting of gross order value (GOV).
How many new stores did Blinkit open?
Blinkit added 243 new stores this quarter, raising its total to 1,544 stores.
