The quick-commerce unit hit the black, and that is good
Eternal pulled off a rare feat in India’s cutthroat quick-commerce wars: its Blinkit division turned operationally profitable for the first time in Q3, delivering a wafer-thin adjusted EBITDA of Rs 40 million. For investors chasing growth at reasonable prices, this looks like validation of founder Deepinder Goyal’s pivot from food delivery into 10-minute groceries. But scratch beneath the headline, and the victory may not be so valuable and engineered more by slowing store expansion and weeding out discount-heavy orders than by any structural moat.
Blinkit’s net order value grew 121% year-on-year, yet sequential growth decelerated sharply to 14% from 27% the prior quarter. HDFC Securities flagged this moderation as being “partially impacted by GST rate rationalization and shift of festive season from Q3 to Q2,” while noting that like-for-like NOV growth still exceeded 130%. But the subtext is clear: irrational competition forced Blinkit to let go of low-margin, promo-dependent demand.
Nirmal Bang was more direct about the competitive pressure: “The management also cautioned that if irrational discounting persists, it may need to respond, and quarterly profitability is not guaranteed.” The firm noted that despite slower order growth, “NOV growth in QC business was recorded driven by higher long-tail products and letting go of discount heavy orders.”
Blinkit added just 211 stores in Q3 versus 272 in Q2, missing its own guidance. HDFC Securities attributed the shortfall to “GRAP-related construction restrictions in Delhi NCR and festivities-led operational constraints.” But the revised target reveals management’s hedged thinking: 3,000 dark stores by March 2027, “which could be further accelerated to 3,500-4,000 stores, if competitive intensity moderates.”
Nirmal Bang said: “In this environment, aggressive dark store opening is counter-productive as it delays paybacks and pushes out the profitability path.” The target of 3,000 stores “assumes irrationality but if it moderates, Blinkit can target 3,500-4,500 dark stores which would keep the NOV growth to 100%+ growth rate.” In other words, the entire growth story depends on competitors going easy.
On margins, HDFC Securities highlighted sequential improvement “driven by supply chain efficiencies, a favorable shift toward high-margin long-tail categories, operating leverage, and the margin-accretive transition from marketplace to owning inventory.” Management noted that “over half of the expected 100bps margin accretion courtesy this transition has been banked, with the rest to accrue over 2-3 quarters.”
The leadership transition announced post-results adds another layer of uncertainty. Albinder Dhindsa stepping up as Group CEO while Goyal shifts to Vice Chairman signals succession planning. HDFC Securities noted matter-of-factly: “Albinder Dhindsa will replace Deepinder Goyal as the Group CEO from Feb-26.”
The food delivery core business remains the cash cow, contributing over ₹5 billion in adjusted EBITDA.
At about Rs 283, Zomato trades at a significant premium to traditional metrics. HDFC Securities maintained its ADD rating with a target of Rs 340, using “45x Mar-28 EV/EBITDA for FD; 1.5x Mar-28 NoV for Blinkit.” The firm revised estimates upward, increasing adjusted EBITDA for the next two years by roughly 8% and 2% respectively, but acknowledged the competitive dependency baked into those numbers.
Nirmal Bang was more aggressive, assigning a Rs 355 target with food delivery valued at 38x EBITDA and quick commerce at 2x gross order value, implying 25% upside. The firm’s enthusiasm, however, came with caveats about modeling an 80% NOV CAGR for quick commerce over the next few years—a tall order if discounting returns.
Both targets rest on high assumptions. Nirmal Bang acknowledged the competitive dependency: “While this can be a bit of an overhang, investors are likely to appreciate profitable growth trajectory ahead with meaningful adjusted EBITDA kicking in rather than delivering EBTDA loss with superlative NOV growth.” Translation: the market’s tolerance for cash burn has evaporated.
Strip out the quick-commerce optionality, and you’re paying a substantial premium for a food delivery business growing mid-teens with flat margins. The rest is pure Blinkit speculation—betting that a business which just posted Rs 40 million in quarterly EBITDA can scale to multi-billion profitability.
The 23% pullback from the Rs 368 high has flushed out momentum chasers, but the stock remains expensive on any traditional metric. The risk-reward is skewed by competitive dynamics. Nirmal Bang flagged the Street’s core worry: “The management described the competitive environment as irrational and volatile due to aggressive discounting and low delivery fees, though there has been no material impact on business quality or NOV market share so far.”
But all depends on whether India’s quick-commerce market matures. The next two quarters will separate believers from bagholders — and reveal whether that Rs 40 million profit in Blinkit was a turning point.
