Eternal (Zomato) shares rose over 2% after Q1 FY27 results as investors focused on strong execution, robust revenue growth, and improving profitability at Blinkit, despite a profit miss. Revenue more than doubled year-on-year, while food delivery and quick commerce continued to show healthy growth. Management's optimistic outlook on easing competition in quick commerce also boosted investor sentiment.
The stock of Eternal Ltd., the holding company behind Zomato, surged by more than 2% during early trade on Thursday, July 23, following favorable analyst reactions to the Q1FY27 results.
The stock of Eternal rose 2.4% to hit a high of ₹291.35 in intraday trade on the NSE. As of 9:19 AM, the stock was up 0.25% at ₹285 against a fall of 0.39% in the Nifty 50 index at 23,903.30. The stock turned out to be one of the top gainers in the Nifty 50 index even with bearish market conditions where the Sensex fell 361.35 points or 0.47% to 76,393.70 and the Nifty dropped 102 points or 0.43% to 23,894.25.
Why Eternal Shares Surged After Q1 Results
The share price increased, as investors overlooked the disappointing quarterly earnings and concentrated on the efficient performance of the company. There were reports of efficient execution by Eternal in its food delivery business and quick commerce business, improvement in the profitability of Blinkit, and the management’s belief that competitive pressure in quick commerce is becoming manageable.
The consolidated net profit for Q1FY27 stood at ₹92 crore, compared to ₹25 crore in the same period last year, indicating an increase of more than three times. However, the profit was down 47.12% from ₹174 crore in Q4FY26 and came below market estimates of ₹335 crore.
The revenue from operations was up 182% year-on-year to ₹20,211 crore in the June quarter from ₹7,167 crore in Q1FY26. The quarter-on-quarter growth in revenue stood at 16.88%, up from ₹17,292 crore. EBITDA grew 22% to ₹594 crore, whereas EBITDA margins marginally improved to 2.9% from 2.8%.
The company’s Food Delivery business reported revenue growth of 33.1% year-on-year to ₹3,537 crore, while net order value increased 20.1% to ₹10,769 crore. Adjusted EBITDA for the segment stood at ₹606 crore, rising 155% year-on-year, with margins improving to 5.6% of net order value.
Monthly transacting customers increased 18.77% to 27.2 million in Q1FY27 from 22.9 million in Q1FY26, indicating continued user growth and higher engagement.
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Blinkit Growth Supports Long-Term Outlook
Blinkit, which is an important platform for quick commerce, continued to drive growth for the company. During the quarter, 200 new stores were added to increase the store base to 2,443. It was noted by the management that the level of competition in the quick commerce space has reached its peak and is likely to stabilize, thus indicating margin expansion.
Experts feel that the margins for Blinkit will get better over the coming years.
Risks Remain Despite Positive Sentiment
Despite the positive outlook of the market, there are worries about delayed profitability improvement in the quick commerce business because of competition and any growth deceleration in the food delivery business. However, good revenue growth and margin improvement, along with execution, have supported investor confidence in Eternal’s growth narrative.
On the whole, Q1FY27 results of Eternal have reflected strong business momentum despite the profit miss because of growth potential in the future.
