What Eternal's Earnings Report Card Means For The Food Delivery And Quick Commerce Sector

Eternal Ltd., formerly known as Zomato, saw the impact of a slowdown in urban spending in the fourth quarter, with its food delivery business reporting a sequential decline in both gross order value (GOV) and net order value (NOV). 

Eternal Ltd., formerly known as Zomato, saw the impact of a slowdown in urban spending in the fourth quarter, with its food delivery business reporting a sequential decline in both gross order value (GOV) and net order value (NOV). 

Eternal has started disclosing net order value (NOV), which represents the total order value after deducting discounts offered by platforms, vendors, banks etc. While this disclosure does not materially impact financial performance, it provides insight into the competitive dynamics of the food delivery and quick commerce sectors. 

Eternal’s food delivery business provided total discounts amounting to 16% in the fourth quarter, up from 15% in Q3. Despite competitive pressures, the delisting of 19,000 odd restaurants, and a delivery partner crunch, the company managed to achieve a marginal gain in adjusted margins, maintaining stable margin as a proportion of both GOV and NOV. However, sustaining market share may become a challenge for margins in the future.

Going-out discounts declined gradually to 14% during the quarter, compared to 21% in Q4 FY24. Meanwhile, discounts in quick commerce stood at 22% at the end of Q4 FY25, slightly lower than 23% in Q3 but higher than 17% in Q4 FY24. Blinkit continued to face stiff competition from Swiggy’s Instamart, Zepto, and other emerging players in the fast commerce space. Higher discounts also decreased average order value, dropping from Rs 707 in Q3 to Rs 665 in Q4. 

Blinkit believes that 10-minute quick commerce is not viable, with the ideal fulfilment time ranging between 20–25 minutes—a shift that could now be referred to as "Fast Commerce". Consumers are transitioning from convenience shopping to budget shopping, increasingly leveraging discounts, as reflected in the difference between GOV and NOV. 

Between food delivery and quick commerce, Eternal provided Rs 11,686 crore in total consumer discounts in FY25. Notably, a significant portion of these discounts were funded by vendors rather than the platform itself. But will vendors or companies continue to fund these consumer discounts?

Blinkit added 294 new dark stores in Q4, bringing its total store count to over 1,300, in line with its guidance to reach 2,000 dark stores by December 2025. The company also expanded its warehousing space by 1 million sq. ft. Eternal, Blinkit’s parent, plans to surpass 2,000 dark stores, with further details expected later in the year. Currently, 40% of its dark stores remain underutilized, but as it adds an additional 700 stores, existing stores will be realigned to improve efficiency. 

Blinkit also plans to shift to an inventory-led model once it receives shareholder approval to become an Indian-owned and operated entity. This transition will increase its working capital requirements, but the company expects the impact to be manageable. It estimates working capital needs to be around 5% of NOV—currently standing at Rs 1,000 crore, projected to rise to Rs 2,000 crore by FY26 as NOV doubles. The low working capital requirement is largely due to the quick inventory turnover cycle. 

Eternal’s total cash balance decreased slightly to Rs 18,824 crore in Q4 FY25 from Rs 19,235 crore in Q3 FY25, largely due to working capital for quick commerce and temporary rise in working capital linked to ticketing advances paid to merchants (IPL, movie chains) in their going-out business. These advances are expected to reverse in the next quarter. However, without positive cash flow from this segment, ongoing working capital support will be required. 

Regardless, cash burns will continue in Eternal’s food and quick delivery businesses. The company raised Rs 8,436.12 crore via QIP for its quick commerce segment, of which Rs 806.76 crore has been utilized. The remaining funds have been invested in fixed deposits, government bonds, and liquidity funds, generating Rs 150.60 crore in interest. Eternal intends to deploy this capital primarily in FY26 and FY27, with most investments occurring in the current financial year. 

The composition of quick commerce deliveries is slowly shifting toward non-grocery items, leading to an increase in average order value. The growing share of general merchandise (non-grocery) within quick commerce, especially in the top 30 cities, may disrupt traditional e-commerce and drive volume migration toward fast commerce.

The large $120 billion addressable market is bringing strong competition from multiple players. Tata is scaling up BigBasket (erstwhile leader in e-grocery), Walmart owned Flipkart is turning into an India based company and focusing on Flipkart Minutes, Amazon is looking at Amazon Tez – all attempting faster last-mile delivery. Other offline retailers like Reliance JioMart, Tata Star Bazaar Quik, DMart Ready are starting to respond with faster home delivery, and not to mention the traditional kiranas are attempting to claw back with home delivery.

A HSBC report estimates that nearly half of the $60 billion e-commerce market could transition to fast commerce channels. However, this shift poses financial strain for companies venturing into this space. Losses in quick commerce, including Blinkit, are expected to peak over the next two quarters as dark store expansion accelerates. Additionally, competitive pricing pressures will keep discounts high, weighing on profitability. 

Blinkit incurred Rs 929 crore in losses during FY25, with accumulated losses rising to Rs 2,328 crore by March 2025, up from Rs 1,399 crore in the previous year. Losses are expected to escalate as investments in dark store expansion increase, and it prioritise market share over profitability in the short term. 

Quick commerce firms have now expanded operations to 150 cities, with each player adopting its own strategy for market entry. 

As the quick commerce model evolves, profitability timelines are being realigned. Challenges such as delivery partner shortages, persistent discounts, and rising working capital costs due to dark store additions continue to pose risks to sustainable growth and could speed up the transition to ‘Fast Commerce’.

Ultimately, this could turn into a race to the bottom—or at least until the cash runs out.