Eternal Q2 Results: Profit Jumps 92%, All You Need to Know

Eternal Limited, the parent company of Zomato and Blinkit, reported a 92% year-on-year increase in net profit to ₹125 crore in Q2 FY27. Revenue also jumped nearly 78% to ₹24,138 crore, supported by strong growth in quick commerce and food delivery.

Despite these numbers, Eternal shares fell around 3.5% following the results. The main concern was that profits missed market expectations. Analysts consensus had expected approximately ₹271 crore in net profit, more than double what the company actually reported.

Meanwhile, Blinkit turned profitable at the adjusted EBITDA level and announced plans to expand to around 5,000 stores by March 2028.

So, while Eternal is growing rapidly, investors face an important question: Can the company convert this growth into sustainable profits, or will aggressive expansion continue to put pressure on earnings?

Eternal Q2 FY27 Results: Key Financial Highlights

Eternal reported strong revenue growth and a sharp improvement in operating profitability.

Adjusted EBITDA nearly tripled to ₹666 crore, suggesting improving operating performance across Eternal's businesses.

However, despite generating more than ₹24,000 crore in revenue, the company earned just ₹125 crore in net profit.

This translates into a net profit margin of approximately 0.5%, meaning Eternal retained only around 50 paise as profit for every ₹100 of reported revenue.

That gap between strong business growth and relatively small net profits explains much of the concern.

Why Are Investors Concerned Despite Eternal's 92% Profit Growth?

1. Profit Missed Expectations Despite Strong Growth

Eternal's net profit increased from ₹65 crore to ₹125 crore, but remained significantly below market expectations of approximately ₹271 crore.

One reason was the continued increase in operating expenses. Total expenses rose 75% year-on-year to ₹24,166 crore. Delivery-related expenses increased to ₹3,581 crore, employee expenses climbed to ₹1,146 crore, and depreciation rose to ₹625 crore.

These costs partly reflect the company's expanding operations, particularly Blinkit's growing store network. However, they also show that a significant portion of Eternal's revenue continues to be absorbed by operating costs.

For investors, the concern is not weak growth, but how much of that growth ultimately translates into profits.

2. Blinkit Turns Profitable, But Its 5,000-Store Expansion Raises Questions

Blinkit delivered one of the strongest performances in Eternal's Q2 results.

Its net order value increased 79.3% year-on-year to ₹20,940 crore, while adjusted EBITDA improved to a profit of ₹184 crore from a ₹156 crore loss last year.

This represents a ₹340 crore turnaround in adjusted operating profitability. However, Blinkit is also accelerating expansion.

The company added 308 net new stores during the quarter, taking its total to 2,751. It has raised its March 2027 store target to more than 3,500 and plans to reach approximately 5,000 stores by March 2028.

This means Blinkit intends to add more than 2,200 stores over roughly 18 months.

New stores generally require upfront spending on rent, employees, inventory and infrastructure before they generate meaningful profits.

The encouraging sign is that Blinkit's mature cities already generate adjusted EBITDA margins above 5%, compared with the overall business margin of just 0.9%.

Management expects improving profitability in older stores to offset the costs of expansion. The key question is whether Blinkit can maintain profitability while expanding its network so aggressively.

3. Eternal's 78% Revenue Growth Doesn't Tell the Full Story

Eternal's reported revenue growth looks impressive, but an accounting change in Blinkit's business model has contributed to the increase.

Earlier, Blinkit primarily operated as a marketplace and recorded commissions and service fees as revenue.

Now, under its inventory-led model, Blinkit also purchases products and sells them directly to customers. This allows it to recognise the full selling value of those products as revenue.

As a result, Eternal's adjusted revenue grew 76% year-on-year, but its like-for-like adjusted revenue growth was lower at 58%.

This does not mean the company's growth is artificial. Blinkit's net order value increased nearly 79%, demonstrating strong underlying demand.

However, investors should distinguish between growth driven by actual business activity and growth influenced by changes in revenue recognition.

Zomato Remains Eternal's Biggest Profit Contributor

While Blinkit is growing faster, Zomato's food delivery business continues to generate most of Eternal's positive adjusted operating earnings.

Food delivery net order value increased 21.5% year-on-year to ₹11,445 crore, marking the fifth consecutive quarter of accelerating growth.

Adjusted EBITDA increased to ₹627 crore, compared with Blinkit's ₹184 crore. However, Zomato's adjusted EBITDA margin declined slightly from 5.6% in the previous quarter to 5.5%.

This highlights an important relationship between Eternal's businesses.

Zomato's established food delivery operations generate earnings that can help support Blinkit's expansion and investments in newer businesses.

However, adjusted EBITDA is not the same as free cash flow. The company must still account for capital expenditure, taxes and working capital requirements.

Meanwhile, District continued to report an adjusted EBITDA loss of ₹64 crore, while other businesses, including Bistro and Nugget, recorded combined losses of ₹91 crore. These losses partly offset the profitability improvements in Zomato and Blinkit.

Eternal's Cash Balance Falls by ₹1,813 Crore

Another development worth watching is Eternal's cash position. The company's consolidated cash balance declined by ₹1,813 crore during the quarter to ₹16,475 crore.

Management attributed much of this decline to higher inventory purchases ahead of the festive season and timing differences in restaurant settlements.

Capital expenditure also increased to ₹941 crore from ₹711 crore in the previous quarter.

Although Eternal continues to maintain a substantial cash balance, its ambitious expansion plans will require further investment.

The important question is whether growing operating profits will eventually generate enough cash to support expansion without putting additional pressure on the company's financial position.

What Should Eternal Share Investors Watch Next?

Eternal's Q2 results highlight three important developments that could shape its future performance.

• Blinkit's profitability: Its mature cities already generate adjusted EBITDA margins above 5%. Investors should watch whether overall margins improve as more stores become established, despite rapid expansion.
• Zomato's food delivery growth: The business has returned to growth above 20%, but maintaining margins will be important as it continues to support Eternal's consolidated earnings.
• Cash generation and consolidated profits: Eternal's adjusted operating earnings are improving, but stronger conversion into net profits and cash flows will be necessary to support long-term expansion.

Final Take

Eternal's Q2 FY27 results show that its underlying businesses are moving in the right direction. Blinkit has turned adjusted EBITDA profitable, Zomato's growth is accelerating, and consolidated operating earnings have improved sharply.

However, the company's profitability remains relatively small compared with its revenue, while aggressive expansion and losses in newer businesses continue to absorb resources.

Blinkit's planned expansion to 5,000 stores could strengthen Eternal's position in quick commerce, but it also creates execution and profitability risks.

For investors, the real question is no longer whether Eternal can grow quickly. It is whether that growth can translate into sustainable profits and cash flows without continuously increasing investment requirements.

The next few quarters will be important in determining whether Eternal can achieve that balance.