Business
Eternal Q2 Results: Five reasons why Zomato-parent’s shares fell 4% despite 183% jump in Q2 revenue
Eternal Q2 Results: Five reasons why Zomato-parent’s shares fell 4% despite 183% jump in Q2 revenue
About this update from Eternal Limited
The shares of Eternal tumbled 4 percent to close in the deep red on October 16, despite hitting an all-time high earlier during the day. This comes after the parent-company of Zomato released its results for the second quarter of FY26.The shares saw strong volatility during the day. Immediately after the release of the results, the stock jumped 4 percent to hit a lifetime high of Rs 368.45 apiece. The stock then sharply declined 8 percent from that level to close at Rs 340.50 apiece.Eternal Q2 Results:Eternal reported a net profit of Rs 65 crore for Q2 FY26. This marks a 63 percent YoY drop from the Rs 176 crore net profit reported in Q2 FY25. Revenue from operations however soared 183 percent YoY to Rs 13,590 crore. Expenses also surged 189 percent YoY to Rs 13,813 crore.Here are the possible triggers behind the sharp decline in share price:Slow food delivery growth rate likely in near term:Zomato has seen a slower recovery growth that what was expected in Q2 FY26, said Eternal Founder Deepinder Goyal. He added that the firm expects a slow uptick in growth rate in the near term. "While we continue to work on inputs to the business (making restaurant food more accessible and affordable for customers), we are also constantly fighting multiple headwinds including soft discretionary consumption in general in India, the impact of quick commerce growth and increasingly volatile weather (extreme heat, extended rains), which continue to weigh on near term growth," he added.The expectations of slower recovery growth and management hinting at softer discretionary consumption may have dampened investor sentiment.Blinkit saw lower-than-expected reduction in losses:Zomato's quick commerce arm Blinkit reported an EBITDA loss of Rs 156 crore in Q2 FY26, higher than the Rs 8 crore loss incurred during the same period last year, on account of the company’s rapid dark store expansion. On a sequential basis, however, the adjusted EBITDA loss was lower than Rs 162 crore recorded in Q1 FY26."While absolute losses decreased...the reduction in loss/ margin expansion was below our expectations," said Albinder Dhindsa, Founder of Blinkit. He said that this was largely driven by the firm's investments to drive higher growth and (NOV) market share in the quarter by passing on efficiency gains to customers, investment in higher marketing spends to acquire new customers, accelerated...