Zomato-Parents Q1 Shocker: How Shareholders Bagged ₹40,000 Crore in 2 Days

Zomato-Parents Q1 Shocker: How Shareholders Bagged ₹40,000 Crore in 2 Days:- In the fast-paced world of Indian e-commerce, few stories have captured investor attention like Zomato-Parent’s Q1 Shocker. Eternal Ltd., the parent company of Zomato and its quick-commerce arm Blinkit, stunned the market in July 2025 with a staggering 90% year-on-year (YoY) profit drop, yet its stock soared, adding ₹40,000 crore to its market capitalization in just two days. How did a company reporting such a drastic profit decline trigger such a massive rally?

This article dives deep into the financials, strategic pivots, and market dynamics behind how shareholders bagged ₹40,000 crore in 2 days. Whether you’re an investor, a business enthusiast, or simply curious about Zomato’s meteoric rise, this comprehensive analysis will unpack the key drivers, offer actionable insights, and explore what this means for the future of quick commerce in India.

The Q1 FY26 Results: A Paradox of Profit and Growth

A Stunning Profit Drop

Eternal Ltd., formerly Zomato, reported a consolidated net profit of ₹25 crore in Q1 FY26 (April-June 2025), a 90% decline from ₹253 crore in the same quarter the previous year. This sharp drop was primarily attributed to heavy investments in Blinkit, its quick-commerce arm, and other emerging segments like its going-out business, District. Despite the profit plunge, the company’s revenue from operations surged by 70.4% YoY to ₹7,167 crore, up from ₹4,206 crore in Q1 FY25. This contrast between plummeting profits and booming revenue set the stage for the market’s unexpected reaction.

Why the Market Ignored the Profit Slump

The stock market’s response was nothing short of spectacular. Eternal’s shares surged nearly 15% on July 22, 2025, hitting an all-time high of ₹311.25 per share, pushing its market capitalization to nearly ₹2.9 lakh crore. Over two days, the company’s valuation soared by ₹40,000 crore, a testament to investor confidence in its long-term growth strategy. But what drove this rally? The answer lies in Blinkit’s meteoric rise and Eternal’s bold pivot toward quick commerce.

Blinkit: The Star of the Show

Quick Commerce Overtakes Food Delivery

For the first time, Blinkit’s net order value (NOV) surpassed Zomato’s food delivery segment, marking a pivotal shift in Eternal’s business model. Blinkit reported a 127% YoY increase in NOV to ₹9,203 crore, driven by a 155% YoY revenue growth to ₹2,400 crore. This growth was fueled by rapid store expansion, with Blinkit adding 243 new dark stores in Q1 FY26, bringing its total to 1,544. The company is on track to reach 2,000 stores by December 2025, a year ahead of its initial target.

Strategic Inventory Shift

Eternal announced a significant change in Blinkit’s operations, moving from a marketplace model to directly purchasing inventory from brands. This shift is expected to improve margins by about one percentage point and allow faster assortment expansion. However, it will reduce Hyperpure’s non-restaurant B2B business, as many B2B buyers were sellers on Blinkit’s platform. This strategic pivot underscores Eternal’s focus on controlling the supply chain to enhance profitability and customer experience.

Blinkit’s Financial Performance

Despite its revenue growth, Blinkit reported an EBITDA loss of ₹162 crore in Q1 FY26, up from ₹3 crore in Q1 FY25, due to aggressive store expansion and marketing investments. However, its EBITDA margin improved from -2.4% in Q4 FY25 to -1.8% in Q1 FY26, signaling progress toward profitability. Management remains optimistic, with Blinkit aiming for EBITDA breakeven by Q3 FY26.

Food Delivery: Steady but Slowing

Zomato’s core food delivery business grew steadily, with adjusted revenue up 17.7% YoY to ₹2,657 crore and a gross order value (GOV) increase of 13% YoY to ₹10,769 crore. The segment’s adjusted EBITDA margin improved to 5% from 3.9% a year ago, reflecting better unit economics. However, demand softness and competition from quick-commerce platforms delivering packaged food have slowed growth. CEO Deepinder Goyal noted that FY26 NOV growth is unlikely to exceed 20%, but the company expects to trend toward 20% in FY27.

Hyperpure and District: Mixed Results

Hyperpure, Eternal’s B2B supply chain arm, saw revenue rise 89.4% YoY to ₹2,295 crore, driven by its restaurant supply business. However, the shift in Blinkit’s inventory model will likely reduce Hyperpure’s non-restaurant revenue. The going-out business, District, reported a 10% sequential revenue drop to ₹207 crore but boasts a higher average revenue per order (₹160) compared to food delivery and quick commerce. Management projects District could scale to $3 billion in annual NOV with $150 million in adjusted EBITDA over the next five years.

Why Shareholders Celebrated: Key Drivers of the Rally

Positive Management Commentary

Despite the profit drop, Eternal’s management painted an optimistic picture. CFO Akshant Goyal highlighted that Blinkit’s NOV surpassed food delivery, with the combined B2C businesses reaching an annualized NOV of nearly $10 billion. CEO Deepinder Goyal emphasized resilience against competitive pressures, stating, “New entrants and disruption are inevitable, but we’ll out-innovate potential competition.” This confidence resonated with investors, who saw long-term value in Eternal’s diversified portfolio.

Brokerage Upgrades and Analyst Optimism

Following the Q1 results, at least ten brokerages raised their price targets, with Jefferies setting a high of ₹400. The median price target rose to ₹311 from ₹287.5, reflecting bullish sentiment. Analysts praised Blinkit’s growth trajectory and improved margins, with INVasset PMS noting, “Investors are reacting positively to Zomato’s narrowing losses and clearer profitability trajectory.”

Market Cap Milestone

Eternal’s market capitalization briefly crossed ₹3 lakh crore, surpassing Nifty 50 constituents like Tata Motors and Wipro. The stock’s 33% gain over the past 12 months and 7% rise in 2025 underscored its strong performance, despite a 90% profit drop. Heavy trading volumes, with 10.55 crore shares traded, further fueled the rally.

Competitive Landscape: Challenges and Opportunities

Rising Competition in Quick Commerce

Eternal faces intensifying competition from players like Swiggy Instamart and Zepto. Swiggy added 316 dark stores in Q4 FY25, reaching 1,021, while Zepto is reportedly raising $450–$500 million at a $7 billion valuation. Despite this, Blinkit’s rapid store expansion and inventory control strategy give it a competitive edge. The launch of Blinkit Foods Ltd., a subsidiary for food preparation and delivery, aims to rival Zepto Cafe, further diversifying Eternal’s offerings.

Food Delivery Headwinds

The food delivery segment is grappling with a sluggish demand environment and a temporary shortage of delivery partners due to high quick-commerce demand. Rumors of Rapido entering the food delivery space add to competitive pressures. However, Zomato’s strong brand and operational efficiencies help it maintain a leading position.

Strategic Vision: Eternal’s Long-Term Play

Eternal’s leadership, under Deepinder Goyal, follows a rotational CEO model, with each business head serving a two-year term. This approach fosters innovation and adaptability. The company’s focus on quick commerce, with Blinkit as the growth engine, signals a shift from food delivery dominance to a diversified e-commerce ecosystem. Investments in marketing and store expansion, while impacting short-term profitability, position Eternal for long-term market leadership.

FAQs: Addressing User Intent

What Caused Zomato-Parent’s Q1 Profit Drop in FY26?

Eternal Ltd., the parent company of Zomato, reported a 90% YoY profit drop to ₹25 crore in Q1 FY26, down from ₹253 crore in Q1 FY25. The primary driver was increased investments in Blinkit, its quick-commerce arm, which incurred an EBITDA loss of ₹162 crore due to rapid store expansion (243 new stores) and marketing efforts. Additional investments in the going-out business, District, also contributed to higher expenses, which rose 77% YoY to ₹7,433 crore. Despite the profit slump, revenue grew 70.4% YoY to ₹7,167 crore, driven by Blinkit’s 155% revenue growth and Hyperpure’s 89.4% increase. Management views these investments as strategic, aiming for long-term growth and profitability, with Blinkit targeting EBITDA breakeven by Q3 FY26.

How Did Shareholders Gain ₹40,000 Crore in Two Days?

Eternal’s stock surged nearly 15% on July 22, 2025, hitting ₹311.25 per share, boosting its market capitalization by ₹40,000 crore to nearly ₹2.9 lakh crore. This rally was driven by strong investor confidence in Blinkit’s performance, which reported a 127% YoY NOV growth to ₹9,203 crore, surpassing Zomato’s food delivery segment. Positive management commentary, including plans for 2,000 Blinkit stores by December 2025, and bullish brokerage upgrades (e.g., Jefferies’ ₹400 target) fueled the surge. Heavy trading volumes (10.55 crore shares) and optimism about Eternal’s quick-commerce pivot further amplified the rally, despite a 90% profit drop.

Is Blinkit’s Growth Sustainable?

Blinkit’s 155% YoY revenue growth to ₹2,400 crore and 127% NOV increase to ₹9,203 crore in Q1 FY26 highlight its rapid rise. The addition of 243 dark stores, bringing the total to 1,544, and a shift to direct inventory purchasing enhance its scalability and margin potential. However, challenges include an EBITDA loss of ₹162 crore and competition from Swiggy Instamart and Zepto. Management’s target of 2,000 stores by December 2025 and EBITDA breakeven by Q3 FY26 suggest confidence in sustainability. Analysts note improving unit economics and a growing quick-commerce market as positive indicators, but sustained profitability will depend on managing expansion costs and competitive pressures.

How Does Eternal Compare to Competitors Like Swiggy?

Eternal’s Q1 FY26 revenue of ₹7,167 crore (70.4% YoY growth) and Blinkit’s NOV surpassing Zomato’s food delivery give it a strong position. Swiggy, still unlisted, has invested heavily in Instamart, adding 316 dark stores in Q4 FY25 to reach 1,021. Zepto, valued at $7 billion, is scaling rapidly. Eternal’s advantage lies in Blinkit’s store count (1,544 vs. Instamart’s 1,021) and inventory control strategy, which could improve margins. However, Swiggy’s broader service offerings and Zepto’s funding pose threats. Eternal’s diversified portfolio (food delivery, quick commerce, Hyperpure, District) and market cap of ₹3 lakh crore make it a leader, but competition is intensifying.

What Are the Risks of Investing in Eternal?

Investing in Eternal carries risks despite its recent rally. The 90% YoY profit drop to ₹25 crore in Q1 FY26 reflects heavy spending on Blinkit and District, which may continue to pressure profitability. Competition in quick commerce from Swiggy Instamart and Zepto, plus potential new entrants like Rapido in food delivery, could erode market share. Macquarie has flagged valuation concerns, citing high stock prices relative to earnings. Demand softness in food delivery and rising operational costs (₹7,433 crore in Q1 FY26) are additional headwinds. However, Eternal’s cash balance of ₹18,857 crore and Blinkit’s growth trajectory provide a buffer. Investors should weigh long-term potential against short-term volatility.

What’s Next for Eternal’s Growth Strategy?

Eternal’s growth strategy centers on quick commerce, with Blinkit targeting 2,000 stores by December 2025 and EBITDA breakeven by Q3 FY26. The launch of Blinkit Foods Ltd. aims to innovate in food preparation and delivery, rivaling Zepto Cafe. The company is also optimizing food delivery margins (5% EBITDA in Q1 FY26) and scaling District to a projected $3 billion NOV by 2030. A shift to direct inventory purchasing for Blinkit will enhance margins but reduce Hyperpure’s non-restaurant revenue. Rotational leadership and a focus on innovation position Eternal to adapt to competition, but managing costs and maintaining growth momentum will be critical.

Conclusion

The Zomato-Parent’s Q1 Shocker—a 90% profit drop juxtaposed with a ₹40,000 crore market cap surge—highlights the market’s faith in Eternal’s quick-commerce pivot. Blinkit’s explosive growth, strategic inventory shifts, and optimistic management commentary have overshadowed short-term profitability challenges, driving how shareholders bagged ₹40,000 crore in 2 days. While risks like competition and high costs persist, Eternal’s diversified portfolio and aggressive expansion make it a compelling player in India’s e-commerce landscape. What are your thoughts on Eternal’s strategy? Share in the comments, subscribe to our newsletter for more market insights, or explore related articles on Moneycontrol and Times of India.