Zomato, now branded as Eternal, has faced a notable downturn as its share price dropped 5.4% to an intra-day low of Rs 220.05. This decline comes on the heels of a disappointing financial performance, with the company reporting a staggering 78% year-on-year fall in net profit, which plummeted to Rs 39 crore in Q4 FY25, down from Rs 175 crore in the same quarter the previous year.

Financial Insights: Revenue vs. Expenses

Despite the plunge in profits, Eternal’s revenue showcased strong growth, surging 64% to reach Rs 5,833 crore in Q4 FY25, compared to Rs 3,562 crore the year before. However, the company’s expenses also rose sharply, climbing 68% to Rs 6,104 crore during the same period.

• Key Figures:
  • Net Profit: Rs 39 crore (Q4 FY25)
  • Revenue: Rs 5,833 crore (Q4 FY25)
  • Expenses: Rs 6,104 crore (Q4 FY25)

Expert Opinions on Eternal’s Future

Nomura’s Take

International brokerage firm Nomura has revised its target price for Eternal, lowering it to Rs 280 from Rs 290. This adjustment reflects concerns over the company’s profitability in the quick commerce sector, especially following a substantial $1 billion raised through a Qualified Institutional Placement (QIP) in November 2024. Despite these concerns, Nomura noted a positive aspect: the company’s cash balance stands at an impressive Rs 18,800 crore as of the close of Q4 FY25.

Eternal’s CFO, Akshant Goyal, stated that the Adjusted EBITDA decreased by 15% year-on-year to Rs 165 crore in Q4 FY25, primarily due to increased investments in expanding its quick commerce network. He added that the improved food delivery EBITDA margin increased to 5.2% from 3.8% a year earlier.

Nuvama Weighs In

Another brokerage, Nuvama, expressed concerns about the intense competition in the sector but maintained a Buy rating for the stock, adjusting the target price slightly from Rs 290 to Rs 300. Notably, Blinkit, a subsidiary, reported lesser-than-expected losses despite rapid expansion. Nuvama anticipates that as the store expansion cycle peaks, EBITDA losses should begin to decline in upcoming quarters.

Domestic Insights: Motilal Oswal’s Perspective

Motilal Oswal, a domestic brokerage, also keeps a Buy rating on Eternal, with a target price set at Rs 260 per share. They remain optimistic about Eternal’s position in the quick commerce and food delivery markets, viewing Blinkit as a transformative opportunity in the retail and e-commerce landscape.

Recap of Q3 Performance

To provide context, in Q3 FY25, Zomato reported a 57% decline in net profit, totaling Rs 59 crore, down from Rs 138 crore year-on-year. Revenue from operations, however, demonstrated robust growth, increasing 64% year-on-year to Rs 5,404 crore.

In summary, while Eternal is experiencing challenges with profitability, its significant revenue growth and strategic investments in quick commerce signal a complex yet promising future in the competitive food delivery market.