Connect with us
In focus Magazine March 2025 advertise

Business

The Eternal Challenge: Zomato’s Net Profit Plunges 78% as a Bigger Bet Takes Shape 

Published

on

The Eternal Challenge: Zomato's Net Profit Plunges 78% as a Bigger Bet Takes Shape 

Once synonymous with India’s food delivery boom, Zomato is now in the throes of reinvention—not just in branding, but in business fundamentals. Rechristened “Eternal,” the company’s latest quarterly results have stunned the market, with a 78% plunge in net profit, dropping from ₹175 crore in the previous year to ₹39 crore. It was a similar story in Q3, where net profit for the December 2024 quarter (Q3 FY25) plunged by 57.24%, falling to Rs 59 crore, compared to Rs 138 crore in the same period last year. 

For a company that has delivered multiple profitable quarters, this downturn raises a crucial question: is this a temporary stumble or a sign of deeper recalibration? 

Also read: Deepinder Goyal Rubbishes Allegations of Zomato’s Internal Crisis 

The Missed Targets and the Trust Reboot 

At the heart of the earnings disappointment lies a nuanced picture. Gross Order Value (GOV) in the core food delivery business grew 16% year-on-year in Q4 FY25—a solid number, but short of Eternal’s projected 20%. Two factors weighed it down: first, the company delisted approximately 19,000 restaurants due to concerns over subpar service and consumer trust issues. Second, the quarter had one fewer day compared to the leap year-boosted Q4 FY24. 

The delisting strategy, while it negatively impacted short-term growth, signals a longer-term vision: reclaiming consumer trust by prioritising quality. CEO Deepinder Goyal has now taken direct charge of the food delivery business—a rare move for a publicly listed tech firm, and one that underscores Eternal’s renewed commitment to core execution. 

Blinkit: The Double-Edged Sword 

If food delivery is Eternal’s legacy, quick commerce is its future—and possibly, its most expensive gamble yet. Blinkit, its 10-minute delivery arm, more than doubled its revenue to ₹1,709 crore in Q4. This growth, however, came with its own price tag. Adjusted EBITDA losses widened to ₹178 crore, reflecting the financial strain of hyper-scaling. The company opened 294 Blinkit stores in a single quarter—a signal of ambition, but also a drain on cash flow. 

Eternal isn’t the only player in this hyper-competitive space. Swiggy’s 15-minute Bolt service already contributes 9% to its food delivery revenue. Zepto Cafe has crossed 1 lakh daily orders and boasts a $100 million GMV run rate with healthy 50% margins. By contrast, Zomato’s own quick-commerce experiments—Zomato Quick and Zomato Everyday—flopped due to operational inconsistencies and infrastructural bottlenecks. Both ventures were shut down, with Goyal candidly admitting the model wasn’t viable. 

An Indian Advantage 

One of the most strategic developments, however, lies not in consumer behavior but in corporate structure. Eternal’s foreign institutional holding has now dropped to 44.36%, qualifying it as an Indian-Owned and Controlled Company (IOCC). This subtle shift in shareholding unlocks significant operational freedom for Blinkit. 

Previously, under Indian FDI regulations, Blinkit couldn’t hold inventory due to its status as a foreign-majority e-commerce platform. That restriction no longer applies. Blinkit can now stock and sell products directly, a move that could redefine its competitive positioning. 

Owning inventory enables Blinkit to introduce higher-margin categories such as gourmet foods, toys, and festive merchandise—areas underserved by current players due to logistical and sourcing challenges. It also allows better control over pricing, supply chain efficiency, and product quality. As competitors remain confined to marketplace models, Blinkit may find its Indian identity a competitive edge. 

A Balancing Act Ahead 

What Eternal is attempting is a delicate balancing act. On one side, it is cleaning up and recommitting to the fundamentals of food delivery by focusing on quality and operational oversight. On the other, it is doubling down on a high-risk, high-reward play in quick commerce, despite mounting losses. 

The short-term numbers paint a stark picture—declining profits, missed targets, and failed experiments. But long-term success could come from sharper focus and structural agility. With a new business model coming into play for Blinkit, the company is gearing up for a strategic reset. 

The road ahead won’t be easy. Profitability may remain elusive in the near term, especially with Blinkit’s cash burn. Yet, if Eternal can scale Blinkit intelligently while regaining user confidence in its core business, this might just be the beginning of its next chapter—not a fall from grace, but a recalibration in the age of instant commerce that could give it a decisive edge.