Can Eternal's Profitability Catch Up With Its Habit Lead?

The Habit Loop, Upgraded

On a Friday in Delhi, the Eternal stack is hard to avoid. You book a table and a comedy set on District, step out, then end the night by summoning fruit and paracetamol on Blinkit. It’s the same consumer, the same card, a thicker slice of the same wallet. That’s the point. Since rebranding from Zomato to Eternal this spring, the company has been stitching food delivery, out-of-home discovery, ticketing and 10-minute groceries into one habit loop.

The “going-out” spearhead is District, born after Eternal bought Paytm’s ticketing units (Insider/TicketNew) for ₹2,048 crore. The flywheel looks sensible: District feeds restaurant demand and vice-versa; events anchor frequency. Traction isn’t hypothetical—District crossed 6.5 million downloads within months of launch and is now bundled across movies, live shows and table bookings. The asset also gives Eternal a seat at the table against incumbent BookMyShow.

But the real engine, today, is quick commerce. Blinkit continues to pull ahead—Bank of America earlier estimated its market share at over 50%, and Eternal’s Q2 FY26 results confirm it’s widening the gap. Blinkit’s store network expanded to 2,100+ dark stores, with management reaffirming a goal of ~3,000 sites by FY27. The density drives faster deliveries, higher in-stock rates, and improved selection. Scale is feeding P&L discipline: in Q2 FY26, Eternal’s revenue tripled to ₹13,590 crore (up 183% YoY), while group PAT came in at ₹65 crore, down sharply from ₹176 crore in the previous year. Adjusted EBITDA stood at ₹224 crore, down 32% YoY—reflecting the strain of Blinkit’s capex-heavy expansion and the shift to an inventory-led model.

Competitors: Funded, But Playing Catch-Up

Competitors aren’t asleep. Swiggy’s Instamart remains the nearest challenger, with ~1,100 dark stores as of mid-year, while BigBasket hovers around ~700. Zepto, however, just reloaded its war chest—raising $450 million in October 2025 at a $7 billion valuation, led by CalPERS, with participation from existing backers like StepStone and Glade Brook. The round brings Zepto’s total funding to roughly $2 billion in under two years and gives it over $900 million in net cash, arming it for a prolonged fight. The company also expanded its ESOP pool to $500 million, signaling long-term intent and talent retention firepower.

Meanwhile, Swiggy is restructuring Instamart toward higher density and working to offset the cost overhang from last year’s aggressive expansion. Its IPO pop has long faded, and the stock remains down ~20% YTD—partly due to weaker unit economics and its divestment of Rapido. Eternal, by contrast, has held investor confidence: shares are up ~17% over 12 months despite profit compression, reflecting faith in its execution-led growth.

The Inventory Turn: Control vs. Cash Flow

The biggest structural change under the hood is Blinkit’s inventory-led model, now accounting for ~80% of Net Order Value (NOV)—a dramatic shift from its earlier marketplace format. This gives Eternal direct control over pricing, assortment, and margins, and allows it to book full order value as revenue. But it also means higher working capital: consolidated net working capital rose to ~₹2,000 crore in Q2, the bulk tied up in Blinkit inventory. Roughly 90% of the quarter’s capex went to expanding and stocking dark stores.

It’s a calculated tradeoff—control buys predictability, speed, and gross margin capture at the cost of liquidity and shrinkage risk. Swiggy has signaled a similar pivot for Instamart, confirming that inventory is the industry’s endgame: whoever owns the shelf owns the speed, substitution, and margin math.

The elephant in your model spreadsheet—Delivery Cost

The last mile remains the choke point. Human-mile inflation, rising compliance costs (like Karnataka’s 1–5% gig-worker welfare fee), and 18% GST on delivery fees have pushed structural costs higher. Eternal’s platform fee increase (from ₹10 to ₹12) and bundling of GST help recover some margin, but elasticity is a real test.

China and the U.S. are already deep into drone logistics at scale. In China, Meituan and JD.com now operate thousands of drone routes across more than 30 cities, completing over 200,000 autonomous deliveries—fully integrated with food and retail apps. In the U.S., DoorDash, Wing (Alphabet), and Flytrex are expanding aerial delivery pilots across multiple states, with FAA approvals steadily widening commercial coverage.

India, by contrast, is still at the regulatory starting line—but momentum is building. As the Civil Drone Bill 2025 matures and logistics players like Eternal (Blinkit) and Swiggy begin pilot programs, the country has the potential to leapfrog through policy-backed corridors and local manufacturing scale. The race is on—and India will catch up faster than most expect.

Eternal Proftability: Can Habit Loop to Convert to Cash Flow?

Eternal is in pole position to win the category. It has the densest quick-commerce grid, a credible consumer flywheel (District ↔ dining ↔ delivery), and a management team with execution muscle—evidenced by store roll-outs, product cadence (today’s AI-scored “Healthy Mode” for food ordering), and steady monetization tweaks. But profitability remains the challenge. The company is paying up—in inventory, in dark-store buildouts, and in consumer acquisition—to press the advantage, while regulatory and tax friction keep the variable-cost floor elevated. If inventory control and fee levers keep outrunning headwinds, operating leverage should show up more cleanly over the next few prints; if not, the market will start questioning how much of Eternal’s growth is bought rather than earned. The working capital drag is now the metric to watch: if inventory turnover accelerates and contribution margins rise faster than cost inflation, operating leverage will begin to show up by mid-FY27.

For now, the growth premium survives—because the habits are real, and Eternal increasingly owns them. But the market’s patience will hinge on one question: can this habit loop finally loop into cash flow?

Disclaimer: AltG, including its principals, directly or indirectly, may hold shares in the companies mentioned. This material titled "Can Eternal's Proftability Catch Up With Its Habit Lead?", any views, comments or communication (above or in the past)  is for informational purposes only and should not be construed as investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.