By Ananta Agarwal
(Reuters) -Indian online delivery player Eternal reported a nearly 78% drop in fourth-quarter profit on Thursday, as its fast-growing quick commerce arm Blinkit spent aggressively to open more stores and stave off intense competition.
Shares of Eternal, which officially changed its name from Zomato in March, had more than doubled in each of the last two years, partly fueled by optimism around Blinkit’s success.
But competition in India’s quick commerce space is intensifying. Blinkit accelerated store openings and offered discounts and subsidized delivery as it jostled for market share with smaller rivals, Swiggy’s Instamart and start-up Zepto.
Eternal said it sees the competition intensifying in the near term.
“The impact is visible in the lack of significant margin expansion that we would have otherwise expected,” Blinkit CEO Albinder Dhindsa said in a call with analysts.
Quarterly revenue from Blinkit more than doubled year on year to 17.09 billion rupees. But adjusted core loss widened to 1.78 billion rupees from 370 million rupees last year, while its store count has more than doubled year on year to 1301 stores.
Eternal on Thursday also flagged likely competition from companies like Amazon and Walmart backed Flipkart, where some delivery times have shortened to four to six hours. The two giants are also newer entrants in the quick commerce industry.
Meanwhile, growth in Eternal’s food delivery platform, Zomato, has slowed down the past few months due to a “sluggish demand environment” and competition from quick commerce itself, which delivers packaged meals, Eternal said.
The company also said it is shutting down Zomato Quick, which delivered food from nearby restaurants with the speed of quick commerce, months after rolling the service out, citing “inconsistent customer experience”.
Adjusted revenue for Zomato grew 17% year-on-year to 24.09 billion rupees, below Eternal’s forecast of 20% growth.
Eternal reported a consolidated net profit of 390 million rupees ($4.6 million) in the March quarter, compared to 1.75 billion rupees last year.
($1 = 84.5880 Indian rupees)
(Reporting by Ananta Agarwal in Bengaluru; Editing by Mrigank Dhaniwala and Leroy Leo)
