Eternal Experiences Decline in Share Price Following Q4 Earnings Report

In the early hours of trading on Friday, Eternal, the prominent food delivery service formerly known as Zomato, witnessed a significant dip in its share price, falling over 5%. The company’s latest quarterly earnings report revealed concerning financial metrics, leading to a reaction from investors. At the start of trading on the BSE, shares plummeted by as much as 5.33%, settling at ₹220.10.

Financial Highlights from Q4 FY25

Eternal’s financial performance for the fourth quarter of FY25 raised some eyebrows, particularly with a reported net profit of ₹39 crore, a staggering 78% decline compared to ₹175 crore during the same quarter last year. However, it’s worth noting that the company’s full-year profit for 2024-2025 grew by 50%, reaching ₹527 crore, up from ₹351 crore in the previous fiscal year.

• Revenue Growth: The company’s revenue from operations surged by 64% year-on-year (YoY) to ₹5,833 crore.
• EBITDA Performance: Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell by 15% YoY to ₹165 crore.

Despite these fluctuations, Eternal ended the March 2025 quarter with a robust cash balance of ₹18,824 crore, slightly down from ₹19,235 crore in the prior quarter.

Insights into the Food Delivery Sector

The food delivery segment saw adjusted revenue increase by 17.5% YoY, totaling ₹2,409 crore during Q4. However, the gross order value (GOV) for this sector dipped by 1.3% quarter-on-quarter (QoQ) to ₹9,778 crore, although it marked an increase from ₹8,439 crore in Q4 FY24.

Should Investors Consider Buying Eternal Shares?

While Eternal’s Q4 results displayed an operating performance that met expectations, the decline in profitability raises concerns. According to Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services, the EBITDAM as a percentage of GOV fell to -1.9% from -1.3% in the prior quarter. This trend is attributed to increased customer acquisition costs linked to the rapid expansion of store openings—an impressive 294 new stores added in Q4, the highest ever for the company.

Eternal’s management has set an ambitious goal of achieving a 2,000 store count by December 2025, which may perpetuate losses in the short term. Mehta notes that the company is prioritizing market share growth over immediate profitability, particularly amid fierce competition.

• Investment Rating: Emkay Global continues to maintain a ‘Buy’ rating for Eternal shares, projecting a target price of ₹290 per share based on discounted cash flow (DCF) analysis for March 2027.

As of 9:18 AM, Eternal’s share price continued to slide, trading 2.41% lower at ₹226.90 on the BSE. Investors are advised to closely monitor the company’s strategies in navigating market challenges and its ongoing efforts to bolster growth.

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