Eternal Faces GST Challenges but Sees Growth in Restaurant Business and Hyperpure Prospects

Image Source: The Economic Times

Eternal Ltd benefits from GST rate cuts that reduce Blinkit’s tax burden by 3 percentage points while targeting 3,000 stores by March 2027. Despite soft discretionary consumption and multiple headwinds, the company expects steady core restaurant growth, a slow uptick in food delivery, and profitability in Hyperpure within two quarters.

Eternal Ltd, the parent company of popular food delivery platform Blinkit, continues to navigate a complex business landscape shaped by regulatory changes and market dynamics. The company reported that recent GST rate cuts have lowered the average GST on Blinkit’s typical basket by about 3 percentage points, easing pricing pressures for customers and improving Blinkit’s competitive positioning in quick commerce.

Key highlights of Eternal’s current business outlook include:

GST Reduction Impact: The reduction in GST rates has directly lowered the tax burden on Blinkit’s typical basket, making products more affordable and potentially spurring higher customer engagement.

Aggressive Store Expansion: Eternal aims to expand Blinkit’s presence to 3,000 stores by March 2027, marking a rapid scale-up in inventory and geographical coverage essential for capturing the growing quick commerce market.

Core Restaurant Business Growth: The company expects its core restaurant vertical to sustain year-on-year growth despite softening discretionary spends in India’s consumer market.

Headwinds Impacting Growth: Multiple challenges, including cautious consumer spending, volatile weather conditions, and the evolving quick commerce competitive landscape, are influencing a slower near-term growth trajectory for Eternal’s food delivery business.

Hyperpure Profitability: Eternal is optimistic about its Hyperpure business achieving profitability within the next two quarters, signaling a turnaround in its high-potential B2B fresh produce supply chain.

GST on Delivery Charges: New GST applicability on delivery charges affects about 2% of Blinkit’s orders where delivery isn’t free, presenting a minor cost headwind.

Capital Expenditure Focus: The bulk of Eternal’s Q2 FY26 capital expenditure was directed towards quick commerce, reflecting a strategic investment in future growth drivers.

Mixed Market Reaction: While Eternal’s shares initially rose 2.5% on sequential profit increases, later corrections indicate cautious investor sentiment amid ongoing uncertainties.

Eternal Ltd’s balanced approach leverages regulatory benefits like GST cuts while managing economic headwinds and competitive pressures. The company’s strong growth ambitions and focus on operational efficiencies, especially in Blinkit and Hyperpure, highlight its resilience and adaptability in India’s evolving digital commerce ecosystem.

Sources: Economic Times, Moneycontrol, Eternal Ltd Investor Relations

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