Eternal shares are up 6% today on Q3 results. This is what you can expect

Shares of Eternal, formerly Zomato, rose as much as 6.2% to their day’s high of Rs 287 on the BSE on Wednesday, ahead of third-quarter results scheduled later today. The stock was the biggest gainer on the 50-share Nifty in the afternoon. Eternal is expected to show strong overall growth in the December quarter, largely driven by Blinkit’s transition to a first-party (1P) model and continued expansion of its quick commerce business. On average, five brokers estimate that consolidated revenue will rise 193% year-on-year in the third quarter, while after-tax profits are expected to rise 51% from a year ago.

However, analysts caution that margin trends and losses at Blinkit and other newer businesses will remain key monitors even as the core food delivery segment continues to see gradual improvement.

Food shipment growth in the third quarter is expected to be stable, but slightly slower than in previous quarters. Nuvama estimates that food delivery net order values ​​will increase 2.2% quarter-over-quarter and 14.1% year-over-year, indicating stable demand but limited acceleration.

Domestic brokerage Motilal Oswal expects the value of food delivery orders to rise by around 12% year-on-year, with take-up rates remaining at around 21.5%. Kotak Equities, meanwhile, expects food supply gross merchandise value (GMV) growth of 18% year-on-year. In terms of profitability, brokers expect a gradual improvement in margins. Nuvama estimates adjusted EBITDA margin as a percentage of net order value at around 5.4%, while Motilal Oswal expects a sequential improvement of 20 basis points to 5.5%. Kotak Equities assumes a lower food delivery EBITDA margin of 4.5%, but still improves sequentially.

Blinkit, the company’s high-speed commercial arm, is expected to be the main growth driver in the third quarter. Brokers broadly forecast Blinkit net order value growth of around 14-15% quarter-over-quarter and 122-123% year-over-year, supported by aggressive dark store expansion and higher order density.

Despite the strong growth, profitability at Blinkit is expected to remain under pressure. Nuvama analysts estimate Blinkit’s adjusted EBITDA loss to widen to around Rs 130 crore, while Kotak Equities is modeling a loss of around Rs 140 crore, although slightly lower sequentially due to improved absorption rates. Motilal Oswal expects Blinkit’s adjusted EBITDA margin as a percentage of net order value to be minus 1.3% in the third quarter. While revenue and earnings growth are expected to remain strong, brokers will closely monitor management’s commentary on competitive intensity, Blinkit’s path to profitability, food delivery order growth and margin sustainability.

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