Eternal's standalone accounts show more profit in a quarter than the group made in a year

Eternal's standalone accounts show a profit after tax of ₹641 crore for last quarter. That is more than the whole group, which runs Zomato food delivery and Blinkit quick commerce, earned in the past four quarters put together: ₹493 crore. The standalone numbers are the ones printed in the tables below, and for a holder they are the less telling set. The group accounts are where the businesses' costs and growth add up, and they show operations that are improving quickly but do not yet pay for the assets and borrowing behind them.

Consolidation adds in the subsidiaries and removes dealings between group companies, and either could account for much of the gap. What the standalone figures do show is a business whose pre-tax profit has rested mostly on other income in every profitable quarter since mid-2023, a share that has risen to 74.3% as the operating margin fell.

Standalone sales grew by more than a third from a year earlier, yet operating profit, which is sales less operating expenses, fell to ₹295 crore from ₹390 crore. The operating margin slipped from 14.7% a year ago to 8.1% last quarter. What held up pre-tax profit was other income of ₹635 crore, equal to 74.3% of pre-tax profit, calculated from the reported figures.

Akshant Goyal, who answered for management on the call, did not tie the standalone figures to any one business. What he said about food delivery does not explain the slide: he described margins in that business as held broadly steady while the company reinvests in growth. Competition there was stiffer last quarter than in the few before, he said, with Zomato itself partly behind it. Asked whether food-delivery margins had peaked, he said that over the next one to two years "we expect the margins to remain flattish." The aim, as he put it, is more absolute adjusted EBITDA, earnings before interest, tax, depreciation and amortisation as the company adjusts them, by spending on growth rather than tuning the margin.

The improvement shows up in the group accounts instead. Over the past four quarters, group EBITDA, calculated from the consolidated accounts, rose to ₹2,200 crore from ₹588 crore a year earlier, while standalone operating profit fell by ₹59 crore over the same span. The gain therefore came from outside the standalone entity. Goyal credited operating leverage, costs rising more slowly than the business as it scales, for much of Blinkit's improvement in adjusted EBITDA margin, and said it would keep driving that margin while expansion lasts.

It is not enough yet. Group depreciation and interest together exceeded that EBITDA by ₹423 crore over the four quarters, against a shortfall of ₹781 crore in the last full financial year. The group's pre-tax profit of ₹993 crore therefore rested on about ₹1,416 crore that did not come from the operating line, calculated from the reported figures. These EBITDA, depreciation and interest figures come from the consolidated accounts, not the adjusted measure the company reports, so they cannot be set directly against management's targets.

Management's targets assume that scale keeps doing the work. Asked whether a clearer read on competition gave more comfort on the billion-dollar EBITDA guidance for the year to March 2029, Goyal declined to comment and said "I think we maintain that guidance as of now." He also said Blinkit's order-value growth, measured year on year, should pick up from the quarter now under way as store openings speed up, and that he did not expect the faster openings to dent margins in the short term.

For now, then, the standalone profit is a poor guide to the group. The group's operating line is closing in on its depreciation and interest bill, but by management's own account food-delivery margins will not do the closing for one to two years. That leaves growth in volume as the lever the company is relying on.