ETERNAL Revenue Jumped 23% in a Quarter — So Why Did Net Income Fall a Fifth Straight Time?

Segment Result Up, Net Income Down: The Tax Bill and the Reclassification

This is Eternal Limited's (formerly Zomato Limited) Q1 FY26 results - the quarter ended June 30, 2025, board-approved July 21, 2025 - the nineteenth quarter as a public company covered in this series. Unlike the prior quarter's post, which drew on a full audited annual report, this is a normal in-year quarter: the source document is the board-meeting outcome filing itself, carrying only the limited-review consolidated and standalone income statements, the segment footnote, and a handful of notes - no balance sheet, no cash-flow statement, and (as with most of FY25's interim quarters) no presentation deck or transcript. Deloitte Haskins & Sells performed the limited review (not an audit) on both statements and flagged nothing beyond the standing GST dispute (see Beyond the Usual).

Revenue from operations grew 22.9% QoQ to Rs. 7,167 crore, up 70.4% YoY from Rs. 4,206 crore a year earlier - the sharpest sequential acceleration since Q1 FY25, after four straight quarters of QoQ growth slowing (+14.1%, +12.6%, +7.9%). Total segment result - the sum of all five reportable segments before unallocated corporate costs - rose 12.5% QoQ to Rs. 325 crore, also a genuine improvement. Read on its own, this looks like a clean re-acceleration. But net income fell to Rs. 25 crore, down 35.9% QoQ and 90.1% YoY - the fifth straight quarterly decline since net income peaked at Rs. 253 crore in Q1 FY25 (Rs. 253cr → Rs. 176cr → Rs. 59cr → Rs. 39cr → Rs. 25cr). The gap between an improving operating picture and a still-falling bottom line is this quarter's real story, and it traces to two separate things: an unusually high consolidated tax charge, and a segment-reporting change that makes the revenue acceleration itself harder to take at face value.

The tax charge did almost all of the damage to net income. Profit before tax fell a comparatively modest 9.3% QoQ, from Rs. 97 crore to Rs. 88 crore - roughly in line with the segment-level improvement being offset by rising depreciation (Rs. 314 crore, up from Rs. 287 crore) and finance costs (Rs. 67 crore, up from Rs. 56 crore) as the business keeps expanding its store and lease footprint. But the consolidated tax expense came to Rs. 63 crore on that Rs. 88 crore of pre-tax profit - a 71.6% effective tax rate, up sharply from 59.8% last quarter (Rs. 58 crore tax on Rs. 97 crore PBT) and a world away from Q1 FY25's net tax credit of Rs. 14 crore. That single swing - not a revenue or segment-margin problem - explains most of why net income fell nearly four times as fast as pre-tax profit this quarter (see Beyond the Usual for the mechanics).

The second complication is that some of this quarter's 22.9% revenue growth may not be like-for-like. A footnote discloses that the Group began shifting Quick Commerce from a pure marketplace model to a combination of marketplace and inventory-led selling during the quarter - a change that will, by the company's own description, increase Quick Commerce's reported revenue (as sales that used to run through Hyperpure to non-restaurant buyers on Blinkit now book as direct Blinkit sales) without any disclosed rupee magnitude. Quick Commerce's revenue grew 40.4% QoQ this quarter, the segment's fastest growth in over a year - impossible to cleanly separate from ordinary demand growth given how the footnote is worded (see Beyond the Usual).

The Prescription

Quantify the marketplace-to-inventory-led transition the moment it shows up in the numbers, not a quarter later. Eternal disclosed the accounting-model shift only as a qualitative footnote, with no rupee estimate of how much of Quick Commerce's 40.4% QoQ revenue growth is real demand versus a change in how the same underlying transactions get booked. A reader has no way to judge whether Blinkit's genuinely improving trend (loss narrowing from Rs. 82 crore to Rs. 42 crore) reflects real operating leverage or is partly an artifact of now recognizing revenue gross instead of net. Given that this transition directly affects the two most-watched numbers in this series - Quick Commerce revenue growth and its narrowing loss - next quarter's filing should disclose the reclassification's revenue impact explicitly, the way companies routinely do for other accounting changes.

Stop letting the standing GST dispute's stated scope drift between filings without a reconciling note. Last quarter's Emphasis of Matter attributed the Rs. 420 crore of GST demand orders specifically to Maharashtra (Rs. 401 crore) and West Bengal (Rs. 19 crore); this quarter's note describes the same Rs. 420 crore, same period (October 2019-March 2022), as covering "all the States" with no state-by-state breakdown. Either the earlier attribution was incomplete or this quarter's is a simplification - either way, a contingent liability large enough to warrant its own disclosure line should describe consistently which authorities are actually pursuing it (see Beyond the Usual).

Key Financial Metrics

Q1 FY26 (quarter ended June 30, 2025, unaudited, limited review) vs Q4 FY25 (quarter ended March 31, 2025, unaudited) and Q1 FY25 (quarter ended June 30, 2024, unaudited) - consolidated, reported in INR crore and USD (converted at approximately Rs. 85.71/$1, the June 2025 month-end rate, applied across all periods shown for consistency)

Metric	Q1 FY26	Q4 FY25	QoQ	Q1 FY25	YoY
Revenue from Operations	✅ Rs. 7,167 crore ($836.3M)	Rs. 5,833 crore ($680.6M)	✅ +22.9%	Rs. 4,206 crore ($490.7M)	✅ +70.4%
Operating Income (Profit before tax)	⚠️ Rs. 88 crore ($10.3M)	Rs. 97 crore ($11.3M)	⚠️ -9.3%	Rs. 239 crore ($27.9M)	⚠️ -63.2%
Net Income (Profit for the period)	⚠️ Rs. 25 crore ($2.9M)	Rs. 39 crore ($4.6M)	⚠️ -35.9%	Rs. 253 crore ($29.5M)	⚠️ -90.1%
Adjusted EBITDA (management non-GAAP)	Not disclosed - no presentation deck filed	Not disclosed	n/a	Not disclosed in this series' data for Q1 FY25's restated basis	n/a
Free Cash Flow	Not derivable - no cash-flow statement filed this quarter	n/a	n/a	Not derivable	n/a

Total segment result (the sum of all five segments before unallocated corporate costs, other income, finance costs, and depreciation) was ✅ Rs. 325 crore, up 12.5% QoQ from Rs. 289 crore, though still below Rs. 362 crore a year ago (see Segment Results) - consistent with the broader margin compression this series has tracked since Q1 FY25.

Trailing-eight-quarter view (Q2 FY24 through Q1 FY26, INR crore): revenue Rs. 2,848 → Rs. 3,288 → Rs. 3,562 → Rs. 4,206 → Rs. 4,799 → Rs. 5,405 → Rs. 5,833 → Rs. 7,167 (unbroken growth, accelerating sharply this quarter after four quarters of deceleration); net income Rs. 36 → Rs. 138 → Rs. 175 → Rs. 253 → Rs. 176 → Rs. 59 → Rs. 39 → Rs. 25 (a clean rise through Q1 FY25, then five straight quarters of decline). Revenue is now growing faster quarter-over-quarter than at any point in this eight-quarter window, while net income keeps falling - the widest divergence between the two lines this series has recorded, and the reason this quarter's headline number needs the tax-rate and segment-reclassification context above rather than a face-value read.

Total cash, investments, and the balance sheet generally are not available this quarter - this filing, like most of FY25's in-year quarters, discloses only the income statement and segment note, not a balance sheet or cash-flow statement. That's a genuine, recurring limitation of Eternal's non-year-end interim filings rather than something specific to this quarter.

Key Operational Metrics

No presentation deck or transcript was filed alongside this quarter's results, so GOV^», Blinkit store count, monthly transacting customers, restaurant-partner counts, and Contribution margin are all not available this quarter - the same gap flagged repeatedly through FY25's in-year quarters whenever no deck accompanies the regulatory filing.

Segment Results

Eternal reports five business-line segments - India food ordering and delivery, Hyperpure (B2B restaurant supply), Quick commerce (Blinkit), Going-out (dining-out, Zomato Live, and movie/event ticketing via the OTPL/WEPL acquisitions), and All other segments (residual). Segment result is operating profit/loss before unallocated corporate costs, share-based payment expense, finance costs, depreciation/amortisation, and other income.

Segment	Revenue (Q1 FY26)	QoQ	Segment Result (Q1 FY26)	Q4 FY25 Result	Q1 FY25 Result
India food ordering and delivery	✅ Rs. 2,261 crore ($263.8M)	✅ +10.1%	✅ Rs. 465 crore (profit)	Rs. 439 crore	Rs. 321 crore
Hyperpure	✅ Rs. 2,295 crore ($267.8M)	✅ +24.7%	⚠️ Rs. (5) crore	Rs. (8) crore	Rs. (14) crore
Quick commerce (Blinkit)	✅ Rs. 2,400 crore ($280.1M)	✅ +40.4%	⚠️ Rs. (42) crore (loss)	Rs. (82) crore	Rs. 43 crore (profit)
Going-out	⚠️ Rs. 207 crore ($24.2M)	⚠️ -9.6%	⚠️ Rs. (48) crore (loss)	Rs. (44) crore	Rs. 11 crore (profit)
All other segments (residual)	Rs. 4 crore ($0.5M)	n/m	⚠️ Rs. (45) crore	Rs. (16) crore	Rs. 1 crore
Total segment result	Rs. 7,167 crore gross		✅ Rs. 325 crore	Rs. 289 crore	Rs. 362 crore

India food ordering and delivery stayed the only segment that's profitable every single quarter shown, posting its best-ever segment result again (Rs. 465 crore, up 5.9% QoQ) on revenue growth of 10.1% QoQ - a healthy, unremarkable quarter for the business's most mature engine. Hyperpure kept narrowing its loss for a fourth straight quarter (Rs. 8 crore to Rs. 5 crore) even as its own revenue grew 24.7% QoQ - notably, the opposite of what the quick-commerce model-transition footnote would predict, since that disclosure specifically says Hyperpure's B2B revenue should shrink as non-restaurant buyers move to buying directly on the Blinkit platform (see Beyond the Usual); either the transition hadn't meaningfully started within the quarter, or its effect is being offset by underlying growth elsewhere in Hyperpure's book.

Quick commerce (Blinkit) is this quarter's most consequential segment: revenue grew 40.4% QoQ - the fastest of any segment - while its loss narrowed by nearly half, from Rs. 82 crore to Rs. 42 crore. Read alone that's the best quarter Blinkit has posted since Q1 FY25's brief profit. But it's also the segment directly named in the marketplace-to-inventory-led transition footnote, and the filing gives no way to separate genuine demand growth from the accounting effect of now booking some transactions gross rather than net - a real ambiguity sitting on top of what would otherwise be an unambiguously good result (see The Prescription).

Going-out stayed loss-making for a third straight quarter, its loss widening again (Rs. 44 crore to Rs. 48 crore) even as revenue fell 9.6% QoQ - the worst trajectory of any segment this quarter, continuing the deterioration first flagged in the Q3 FY25 post and unresolved through two subsequent quarters. This segment carries the OTPL/WEPL movie-ticketing and events businesses acquired in August 2024, though the filing still doesn't disclose their standalone contribution separately from legacy dining-out and Zomato Live. All other segments swung to a Rs. 45 crore loss from Rs. 16 crore - immaterial in absolute size relative to the group, but nearly three times worse, with no segment-level detail given on why.

Beyond the Usual

This quarter's source document is a limited-review board-meeting filing, not a full annual report - genuinely thinner on footnotes than the prior quarter's audited annual report, but it still has real, checkable disclosures worth working through.

A quick-commerce accounting change is inflating segment revenue by an undisclosed amount

The Group disclosed, in a single footnote, that it "initiated transition from its marketplace model to a combination of marketplace and inventory-led model" in the Quick commerce segment during the quarter - meaning some transactions that used to be booked as commission/take-rate revenue on a marketplace basis are now booked as gross sales, with revenue in the Hyperpure segment expected to fall correspondingly as non-restaurant B2B buyers become direct Blinkit customers. No rupee figure is given for the size of this effect. Quick commerce's revenue grew 40.4% QoQ this quarter - by far the fastest of any segment - and it's impossible from this disclosure alone to tell how much of that is the accounting change versus real growth in demand. A company changing how it recognizes revenue in its fastest-growing, most-watched segment, in the same quarter that segment's headline growth rate jumps, without quantifying the effect, is exactly the kind of disclosure gap that can make a real trend look better (or worse) than it is.

Blinkit's cumulative losses since acquisition reached Rs. 2,696 crore in a single quarter's jump of Rs. 368 crore, with no impairment recognized

The standalone financial statements' parental-support note now discloses cumulative losses at three subsidiaries since their respective investment dates: Zomato Hyperpure Private Limited (ZHPL) Rs. 983 crore (up from Rs. 877 crore at the FY25 year-end, a Rs. 106 crore increase in one quarter), Zomato Entertainment Private Limited (ZEPL) Rs. 139 crore (up from Rs. 130 crore), and Blink Commerce Private Limited (BCPL, i.e. Blinkit) Rs. 2,696 crore since its August 2022 acquisition (up from Rs. 2,328 crore at FY25 year-end - a Rs. 368 crore jump in a single quarter). The Board again concluded no impairment is required on any of the three as of June 30, 2025. Blinkit's cumulative loss is now roughly 77% of the ~Rs. 3,507 crore of goodwill allocated to the acquisition (see the Q4 FY24 post) - a ratio that keeps climbing even as the segment's quarterly loss narrows, since the accumulated total only ever adds, never subtracts.

The GST dispute's disclosed geography changed between filings, without explanation

Last quarter's audited annual report carried a Deloitte Emphasis of Matter attributing the Rs. 420 crore of GST demand orders specifically to Maharashtra (Rs. 401 crore) and West Bengal (Rs. 19 crore) authorities. This quarter's note describes the same Rs. 420 crore, the same October 2019-March 2022 period, as Orders "for all the States" - dropping the state-level breakdown entirely - while separately disclosing Rs. 21 crore of newer Show Cause Notices (April 2022-March 2023) specifically naming Andhra Pradesh and Gujarat. No provision is booked against either amount, and the company continues to say it has a strong case on merits. The dispute itself hasn't changed size or status; only how precisely its geography is described has, and that inconsistency is worth watching the next time this thread is disclosed.

Eternal incorporated a new wholly-owned subsidiary, Blinkit Foods Limited, approved at the same board meeting that reported these results. Per the disclosure, Blinkit Foods will engage in "the business of providing food services (including innovation, preparation, sourcing, sale and delivery of food to customers)" - language describing in-house food production, not just marketplace listing. Alongside the marketplace-to-inventory-led transition flagged above, this points toward Eternal building more of Blinkit's supply chain in-house rather than purely intermediating third-party sellers - a structural direction worth tracking in future quarters once Blinkit Foods actually starts operating and its financial contribution becomes visible.

The gap between consolidated and standalone profitability widened further this quarter, and helps explain the unusual consolidated tax rate. Eternal Limited's standalone (parent-only) profit before tax was Rs. 681 crore this quarter on Rs. 79 crore of current tax - an 11.6% effective rate, unremarkable for an Indian company with various deductions and incentives. Consolidated profit before tax was only Rs. 88 crore, meaning loss-making subsidiaries (chiefly Blinkit and Going-out, per the segment note) erased roughly Rs. 593 crore of the parent's standalone profit on consolidation. But because those subsidiaries' losses don't generate an equivalent tax benefit at the group level, the Rs. 63 crore of consolidated tax expense - largely a function of the profitable parent entity's own tax bill - lands on a much smaller consolidated pre-tax profit, mechanically producing the 71.6% effective rate flagged in The Real Driver above. This is a structural feature of how Eternal's group is taxed, not a one-off surprise, but it's the direct mechanical reason net income fell so much faster than pre-tax profit this quarter (see the tax-rate discussion above).

Target Valuation Range

Eternal is trading at roughly Rs. 2,39,848 crore market cap - 8.37x annualized and 10.34x TTM revenue (no EV estimate possible this quarter, with no balance sheet disclosed), versus 7.84x/9.04x last quarter. Eternal's share price rebounded 31% this quarter, largely reversing last quarter's sell-off, even as net income fell for a fifth straight quarter on a tax-rate spike and a revenue base partly inflated by an accounting reclassification - the stock looks priced for the revenue headline, not for what's actually driving profit right now.

Eternal's shares closed at Rs. 264.15 on June 30, 2025, up 30.97% from the Rs. 201.70 close at the end of Q4 FY25 - the sharpest single-quarter rebound in this series' two-year price-history window, following last quarter's 27.5% decline. No stock split has occurred in that window, so this is a like-for-like nominal comparison.

With paid-up equity share capital of Rs. 908 crore at Rs. 1 face value, that implies approximately 908 crore shares outstanding at quarter-end - essentially flat versus Q4 FY25's 907 crore, meaning this quarter's price move was driven by valuation re-rating, not new dilution.

Market cap buildup	Q4 FY25	Q1 FY26
Share price (period-end)	Rs. 201.70	Rs. 264.15
Shares outstanding	~907 crore	~908 crore
Market capitalization	Rs. 1,82,942 crore	Rs. 2,39,848 crore ($27.98B)

Market cap tracked the share-price move almost exactly since share count barely moved. With no balance sheet available this quarter (see Key Financial Metrics), an enterprise-value estimate isn't possible this time, unlike the prior quarter's post.

Peer-multiple sanity check	Q4 FY25	Q1 FY26
Revenue (annualized)	Rs. 23,332 crore	Rs. 28,668 crore
Revenue (TTM)	Rs. 20,243 crore	Rs. 23,204 crore
P/S (annualized quarter revenue)	7.84x	8.37x
P/S (TTM revenue)	9.04x	10.34x

The annualized-quarter multiple's uptick is smaller than it looks because this quarter's revenue base itself grew faster than the share price - a reminder that the reclassification flagged above (see Beyond the Usual) is also quietly lowering this multiple without a corresponding change in the underlying business. The TTM multiple rose as the market cap increase outpaced TTM revenue growth.

There's still no comparably-sized listed pure-play Indian food-delivery-plus-quick-commerce peer to build a direct multiple against; Swiggy remains the closest, but its own quarterly results still haven't been sourced for this series, so a side-by-side comparison isn't attempted here.

A real discounted-cash-flow model remains out of reach this quarter for the same reason as last quarter: FY25's full-year free cash flow was negative, and no cash-flow statement was filed this quarter to check whether that's reversed. The peer-multiple read above - a valuation that re-rated back up to roughly where it stood two quarters ago, on a quarter where net income fell again and part of the revenue acceleration is an accounting artifact rather than confirmed new demand - doesn't support calling the stock cheap. It's the peer-multiple sanity check that's available, not a verdict this series can currently make with more precision.

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