Eternal Q1 Results Review: Blinkit Boom Or Profit Problem? Why Brokerages Are Divided On Future Prospects
The company's strong topline growth was overshadowed by a sharp drop in net profit, leading to diverging views on valuation and forward guidance.
Brokerages gave mixed reactions to Zomato’s first-quarter results, with UBS, Citi, and Bernstein citing strong momentum in quick commerce via Blinkit, while Macquarie flagged rising costs and questioned the valuation. The company posted higher revenue but missed profit expectations, leading to diverging views on growth and sustainability.
Zomato's parent reported a 23% quarter-on-quarter rise in revenue to Rs 7,167 crore in April-June quarter, beating estimates of Rs 6,624 crore. Ebitda rose 60% to Rs 115 crore, but missed the Rs 179 crore estimate pegged by Bloomberg. Margin came in at 1.6%, compared with expectations of 19.2%. Net profit fell 36% from the previous quarter to Rs 25 crore, missing consensus forecasts of Rs 106.8 crore, anticipated by Bloomberg
Eternal (Formerly Zomato) Q1 Results Key Highlights (Consolidated, QoQ)
Revenue up 23% to Rs 7,167 crore versus Rs 5,833 crore (Estimate: Rs 6,624 crore)
Ebitda up 60% to Rs 115 crore versus Rs 72 crore (Estimate: Rs 179 crore)
Margin at 1.6% versus 1.2% (Estimate: 19.2%)
Net profit down 36% to Rs 25 crore versus Rs 39 crore (Estimate: Rs 106.8 crore)
ALSO READ
Blinkit Vs Zomato: Which Segment Led Eternal's Revenue In Q1 FY26? Here's What Order Book Reveals
Here's what analysts had to say about Zomato parent's Q1 results
UBS On Zomato
UBS retained a Buy rating on Zomato and maintained its price target at Rs 315, calling the results "healthy across the board" despite the bottom-line miss.
“Blinkit growth and margins were ahead of our expectations,” UBS said. “Quick Commerce revenue grew 40% QoQ (155% YoY), beating our estimates by 22%.”
While acknowledging that consolidated adjusted Ebitda missed estimates by 26%, UBS pointed to improving Quick Commerce unit economics and stable delivery volumes.
“Food Delivery margins declined slightly to 4.2%, impacted by seasonal factors like festival-driven delivery constraints and bad weather,” the brokerage noted.
Looking forward, UBS highlighted encouraging management commentary, “Food Delivery growth is expected to reaccelerate to over 15% in FY26, and towards 20% in FY27. Quick Commerce margins are also expected to improve, especially as Blinkit moves to a 1P model.”
UBS reaffirmed its long-term view stating, “This can be a $3 billion NOV business, generating $150 million in adjusted Ebitda over the next five years.”
Citi On Zomato
Citi maintained its Buy call and raised its target price from Rs 290 to Rs 320, citing the improving outlook of Blinkit.
“Quick Commerce delivered intact growth momentum with lower losses,” Citi stated. “Adjusted Ebitda for Blinkit surprised positively"
Even as overall adjusted Ebitda was 25% below Citi’s estimates, mainly due to margin pressures in Food Delivery and investments in newer ventures like Bistro, the firm remained upbeat.
“We believe that gains from the improved Quick Commerce outlook more than offset the negative impacts,” it said. “Zomato remains one of our top India internet picks.”
Bernstein On Zomato
Bernstein called Q1FY26 a "robust quarter" for Zomato and raised its target price from Rs 280 to Rs 320, reiterating an Outperform rating.
“The beat was driven by dark store expansion and narrower than expected adjusted Ebitda losses,” Bernstein said. “Quick Commerce GOV grew 140% YoY, supported by the addition of 243 stores.”
Zomato’s move to a 1P inventory model and plans to scale to 2,000 Blinkit stores by December 2025, with visibility up to 3,000, were key positives for Bernstein.
“Zomato is poised to benefit from the structural shift to quick commerce,” the brokerage added. “It remains our top pick in the Indian internet space.”
On Food Delivery, Bernstein noted a steady 16.2% YoY GOV growth and stable Ebitda margins at 4.2%.
“Management expects NOV growth to reaccelerate gradually, guiding for 15% in FY26,” it highlighted.
Macquarie On Zomato
In contrast, Macquarie retained its Underperform rating with a target price of Rs 150, expressing concern over both valuation and the sustainability of Blinkit’s economics.
“While Blinkit showed explosive growth and losses narrowed, steady-state economics are yet to be proven,” the note stated. “We estimate the current share price implies a $15 billion valuation for Blinkit — which appears stretched.”
Macquarie was especially critical of Food Delivery, “Growth in this segment moderated to 13% YoY, missing expectations, with a mild margin compression,” the brokerage said.
The firm said that competitive intensity in quick commerce may remain high, “We expect a prolonged period of losses due to lower throughput and rising input cost inflation, despite improving optics in the short term.”
Macquarie also flagged a 60% YoY increase in employee costs, now accounting for 12% of revenue, and higher-than-forecast losses in newer segments like Bistro.
