Eternal lifts quick commerce margin target to 6% on 21% volume jump

Eternal Ltd. reported quick commerce volume rose 21% in the June quarter and raised its long-term margin target to 6%, as larger store investments improved efficiency.

"We have increased the CapEx per store in our business, and these investments are leading to an increase in efficiency," Akshan Goyal, management at Eternal, said.

Monthly transacting users exceeded 30 million, with older cohorts spending three times more than three years ago, mostly driven by frequency. Average order value was flat year over year, and executives said they do not expect meaningful AOV growth ahead. CapEx per store rose to about INR 2.5 crore from INR 1 crore as the company shifted to larger store formats. The company did not disclose actual revenue or earnings per share for the quarter.

Shares slipped 0.77% to $284.4, a modest move that suggested investors weighed stronger operating trends against heavy investment and persistent competition. The stock trades well above its 52-week low of $212.6 and below its high of $368.45.

Management said competitive intensity was at its peak in the quarter but has become more predictable, with rivals focusing mainly on subsidies and delivery fee discounts. Most growth came from deeper penetration in existing cities rather than geographic expansion, and customer retention improved while marketing spend declined.

The company raised its long-term quick commerce EBIT margin target to 6%, including ESOP expenses and depreciation, from a prior 5%-6% range. Goyal said larger stores and higher CapEx are improving efficiency and giving the company better visibility on margins.

Inventory losses remained at about 1.8% of net order value, and management said there may be little room for material improvement. Net working capital stood at 14 days, with a long-term steady-state target of about 12 days. Operating cash flow was helped by a one-time tax refund of about INR 1,650 crore.

For Bistro, the cloud kitchen business, Eternal is adding about 10 kitchens per quarter. The company described Nugget, its enterprise AI product, as still in stealth mode but gaining traction. District, its going-out business, is expanding, with dining and movies the largest categories.

The margin target raise signals management expects efficiency gains from larger stores to compound over time. Investors will watch whether the company can sustain volume growth above 20% without resorting to discounting, as competition in quick commerce remains intense.

This article is for informational purposes only and does not constitute investment advice.