Eternal reported its Q1 FY26 earnings, showing impressive revenue growth but a sharp decline in profit. The company’s focus on expanding Blinkit, its quick-commerce arm, remains the main story.
Strong Revenue Growth Driven by Blinkit
Eternal posted a 70% year-on-year (YoY) surge in revenue, reaching ₹7,167 crore (~US $830 million) in Q1 FY26. This sharp jump was primarily fueled by Blinkit, which has rapidly expanded its network of dark stores and increased order volumes. Blinkit now contributes nearly half of the company’s Net Order Value (NOV), reflecting its growing importance within the business.
The quick-commerce space in India has become highly competitive, and Eternal is moving aggressively to capture market share. This expansion strategy helped beat top-line analyst expectations, which were earlier pegged at ₹6,624 crore.
Eternal Profit Drops 90% Amid High Costs
Despite the impressive revenue numbers, net profit plunged 90% YoY, falling to just ₹25 crore from ₹253 crore last year. The primary reason behind this steep fall was the high costs associated with Blinkit’s growth—including large discounts, marketing expenses, and new dark-store setups.
However, there’s a silver lining: EBITDA improved sequentially to ~₹115 crore, indicating some operational discipline amid these heavy investments. Food delivery, Eternal’s core business, remained profitable but saw only moderate growth. Blinkit, while growing fast, continues to operate at a loss.
Management, led by CEO Deepinder Goyal, acknowledged seasonal margin pressures and reaffirmed the company’s commitment to long-term investments, especially in Blinkit.
Market Reaction & Analyst View
The stock market responded positively to Eternal’s Q1 performance. Shares jumped nearly 7% intraday, hitting a five-month high of ₹277, and closed up around 5–6%. Investors seemed encouraged by the revenue momentum and Blinkit’s scale-up, even as profit fell sharply.
From a technical perspective, the stock has rallied 34% since April lows and is now trading above key moving averages. However, analysts caution that a short-term pullback may be likely.
Strategically, brokerages like Morgan Stanley see the stock heading toward ₹320, citing strong Q4-FY25 performance and low dilution risk. Eternal’s inclusion in the Nifty 50 at a price-to-earnings (PE) ratio of 455× has raised eyebrows, making it the index’s most expensive member.
What It Means for Investors
For investors, the big picture remains intact: Eternal is prioritizing growth over near-term profitability, with a heavy focus on building Blinkit into a sustainable revenue driver. Margins may stay under pressure in the short run, but analysts believe they could improve once Blinkit reaches operational scale.
The valuation debate continues, especially with Eternal trading at such a high PE multiple. While the growth story excites many, some are cautious about how sustainable this trajectory is, especially if Blinkit’s losses don’t narrow in coming quarters.
In the short term, traders may look for a breakout above ₹280, while long-term investors will want to watch cost control, cash burn, and progress toward profitability in Blinkit.
Conclusion
Eternal’s Q1 FY26 results highlight the dual nature of its business: explosive revenue growth coupled with profit strain. The market’s optimism shows faith in the company’s vision, but elevated costs and valuation risk remain challenges. Investors are betting that Blinkit will eventually deliver both growth and profitability. Until then, Eternal remains a high-risk, high-reward stock in India’s digital economy landscape.
F.A.Q.
– Why did Eternal’s profit drop by 90% in Q1 FY26 despite strong revenue growth?
The sharp fall in profit was due to high spending on Blinkit, including discounts, dark-store expansion, and operational costs. While revenue increased, these aggressive investments weighed heavily on the bottom line.
– What contributed to the 70% revenue growth in Q1 FY26?
The major driver was Blinkit, Eternal’s quick-commerce arm, which saw significant growth in order volume and expanded its delivery network rapidly.
– How did the stock market react to Eternal’s Q1 FY26 earnings?
The stock surged about 7% intraday and closed up nearly 6% after the earnings announcement, as investors focused more on revenue growth and long-term potential than on the profit decline.
– What is the outlook for Blinkit’s profitability?
Blinkit is still operating at a loss, but analysts expect margin recovery once it reaches scale. The company continues to invest heavily for long-term growth, delaying immediate profitability.
– Why is Eternal’s valuation a concern for some investors?
Eternal trades at a very high PE ratio (455×) after being added to the Nifty 50 index, making it the most expensive stock in the index. This raises concerns about sustainability if profit margins don’t improve.
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