Numbers

The Numbers

Eternal (formerly Zomato) is mid-transition from a loss-making food-delivery pure-play into a two-engine platform layering Blinkit quick-commerce on top. FY2024 was its first annual net-profit year, FY2025 scaled it, and trailing twelve-month revenue just doubled again — but mostly because Blinkit flipped to an inventory-led accounting model, which inflates reported revenue while compressing margins. The stock trades on price-to-sales, not earnings: operating margin is ~2%, return on capital is ~3%, and the P/E is in four digits. The single metric that decides whether ₹257 is cheap or expensive is Blinkit's steady-state contribution margin — nothing else will rerate or derate the stock as much.

Snapshot

The market cap prices in years of unit-economics improvement that have not yet shown up in the income statement. Scale is real; profitability is nascent.

Revenue has accelerated four times — and changed character

Revenue roughly doubled every year from FY2022 through FY2025, then doubled again on a trailing basis — but the last leg is partly an accounting artifact. From April 2025 onwards, Blinkit shifted toward an inventory-led model, so what was previously recorded as net commission revenue now hits the top line gross. The business is genuinely bigger, but the optical revenue growth rate overstates the underlying change in take-rate economics.

Margins: from catastrophic losses to thin profits — and holding the line

The pattern that matters: losses narrowed for four straight years, flipped positive in FY2024, and stabilised in the 2–3% band through FY2025. The TTM dip back toward 0.5% net margin is what spooked the stock in early 2026 — it coincides with the Blinkit inventory-mode transition, where gross revenue swelled faster than operating leverage could catch up. The bullish read is that margins are holding roughly flat in absolute rupees; the bearish read is that at ~2% op margin, any cost shock or competitive pressure vaporises the earnings.

Quarterly trajectory — the story the annuals hide

Quarterly revenue jumped from ₹7,167 cr in 1Q26 to ₹16,315 cr in 3Q26 — a 128% leap in six months that no organic business produces. This is the Blinkit accounting switch landing. Operating income more than tripled over the same span (₹115 cr → ₹368 cr) but as a share of revenue stayed in the 2% band. The reader should watch op-income in rupee terms, not as a margin ratio, until the comparable base resets.

Is the reported profit real cash?

The inflection is clean: operating cash flow turned positive in FY2024 alongside GAAP profit. FY2025 is more nuanced — operating cash flow (₹308 cr) came in below net income (₹527 cr), giving a conversion ratio of roughly 58%. That is not a quality red flag on its own — it reflects working-capital build as Blinkit ramps inventory — but it's a metric to track. The earlier years (FY2020–FY2023) show cumulative operating cash outflows north of ₹4,700 cr, which is why the balance sheet is now so heavily funded by equity issuance rather than retained earnings.

The balance sheet: a bank account with a business attached

As of Q2 FY2026, Eternal carries ₹14,758 cr in investments against ₹3,351 cr of debt — roughly ₹11,400 cr of net cash, most of it the unspent proceeds of the 2021 IPO and subsequent raises. Debt has crept up in the last two quarters to fund Blinkit's inventory and dark-store buildout, but the net-cash cushion remains enormous relative to the business's negative operating cash flow years. Book value per share is about ₹32, and the stock trades at roughly 8× book.

Working capital: a structural negative — and a quiet advantage

Eternal's cash-conversion cycle has been negative since FY2021 — customers pay up front; restaurants and dark-store suppliers are paid on terms. That's float. It shrank from -513 days in FY2021 (artificially wide when revenue was tiny) to -54 days in FY2025 (more representative at scale). ROCE crossed zero in FY2024 for the first time and sits at ~3%. This is the cleanest single picture of the turnaround.

Price: from IPO pop to two-year compounder to recent drawdown

Two distinct regimes. From the July 2021 IPO to mid-2023, the stock was a value-trap punishment for buying unprofitable tech at 2021 prices — down 70% at the July 2022 trough. From July 2023 through September 2025, it compounded ~6× on the back of the profitability inflection. Since then it has given back roughly 20% on competitive-intensity worries from Swiggy Instamart and AI-disruption narratives around food delivery, though the 52-week low of ₹213 still sits well above the profit-inflection-era lows.

Valuation — expensive on earnings, reasonable on sales

The P/E number is almost unhelpful — at ~1,070× on a 0.5% net-margin base, any normal earnings upgrade collapses the multiple. Price-to-sales (~5.4×) is the more honest anchor. It puts Eternal at a ~2× premium to the sector median, which is justified only if Blinkit's steady-state contribution margins end up double-digit and food-delivery scales without margin compression. The gap between these two views is the whole bull–bear debate.

Broker view and fair-value range

Six of the seven covering brokers rate the stock Buy with an average target of ₹360 — roughly 40% upside from ₹257. Base case ₹320 assumes Blinkit continues its current margin trajectory. The bear case ₹210 is what the market already tested in October 2025; the bull case ₹430 requires Blinkit to prove a double-digit contribution margin path over the next two years.

What to take away

The numbers confirm that Eternal has completed the loss-to-profit crossing, runs a structurally negative working-capital cycle that generates float, and sits on a net-cash balance sheet most Indian consumer companies would envy. They contradict the lazy framing that this is still a burn-it-all-down startup — operating losses ended in FY2023. What to watch next quarter: Blinkit's reported take-rate and contribution margin on a same-store basis, because that is the only variable that can justify the current P/S multiple while the headline P/E remains unusable.