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Eternal shares fall but recover soon after despite competition, profitability warningEternal attributed the slowdown in Zomato's food delivery business to a sluggish demand environment and shortage of delivery partners. It ended up delisting 19,000 restaurants during the quarter.By Mangalam Maloo    | Hormaz Fatakia   May 2, 2025, 9:23:35 AM IST (Updated)2 Min ReadShares of Eternal Ltd., parent company of food delivery aggregator Zomato, are likely to be under pressure on Friday, May 2, after the company warned of intensifying competition and widening losses to protect its market share. In response, brokerages have cut their price targets on the stock.

In its March quarter earnings statement, Eternal said that Zomato's food delivery business continued to see a slowdown in its growth.

Food delivery Gross Order Value (GOV) during the quarter grew only at 16%, compared to 16.8% in the previous quarter, and 28.5% during the same quarter last year. Food Delivery GOV has slowed down for at least the last five quarters.

The company attributed the slowdown to a sluggish demand environment and shortage of delivery partners. It ended up delisting 19,000 restaurants during the quarter.

For the Quick Commerce business, also known as Blinkit, Gross Order Value grew by 134% from the same quarter last year and 21% in comparison to the December quarter.

However, on an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) level, the losses for Blinkit widened to ₹178 crore, compared to a loss of ₹3 crore during the start of financial year 2025.

Eternal said that competition is likely to intensify further in the near term and it will aggressively look to grow its market share. It went on to add that short-term profitability goals will not come in the way of its market share growth plans.

Blinkit added 294 net new stores during the March quarter, taking the total count to 1,301 stores.

Brokerage firm Jefferies has maintained its "hold" rating on Eternal and cut its price target marginally to ₹250 from ₹255 earlier.

It said that management commentary on Quick Commerce was bearish due to the heightened competitive intensity, which the management also sees increasing in the future.

Therefore, it has cut its adjusted EBITDA estimates on Eternal by 5% to 15% and prefers to remain on the sidelines.

Nomura has retained its "buy" recommendation and marginally cut its price target on Eternal to ₹280 from ₹290 earlier. It wrote in its statement that the company is well positioned to weather the competition.

Nomura wrote that it has marginally cut its price target to factor in the lower near-term profitability. A key risk to their call is lower profitability for Blinkit for an extended period, beyond financial year 2026.

Shares of Eternal ended little changed on Wednesday ahead of the results announcement. The stock has risen 9.5% in the last one month.Continue ReadingFirst Published: May 2, 2025 6:35 AM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsZomato Share Price