Eternal, one of India's leading retail conglomerates, reported a decline in fourth-quarter net profit as the company ramped up its investments in the fast-growing quick commerce segment. The move underscores Eternal’s strategic pivot toward rapid delivery services, even at the cost of short-term profitability.
Earnings Overview
According to the financial results released late Friday, Eternal posted a consolidated net profit of ₹198 crore for the quarter ended March 31, down 23% from ₹256 crore a year earlier. Revenue, however, rose 14% year-on-year to ₹4,986 crore, bolstered by strong performance in its core fashion and lifestyle segments and an expanding customer base across Tier II and Tier III cities.
The company’s EBITDA margin narrowed to 9.8% from 11.6% in the same quarter last year, largely due to higher operating costs associated with logistics, warehousing, and technology integration for its quick commerce initiative.
Quick Commerce Push Weighs on Margins
Eternal’s management attributed the profit dip primarily to its substantial outlay in building a national quick commerce network, a strategy that aims to meet surging consumer demand for ultra-fast deliveries of daily essentials, fashion, and electronics.
The company launched “Eternal Swift” in late 2023 — a 30-minute delivery service in urban centers — and has since expanded to over 40 cities. Analysts estimate Eternal has spent more than ₹650 crore in the past two quarters alone on building dark stores, enhancing last-mile delivery infrastructure, and onboarding local vendors.
“We are in investment mode,” said Rakesh Mehra, CEO of Eternal, during the earnings call. “Quick commerce is not just a trend but a structural shift in how urban India shops. Our goal is to build scale and leadership early, even if that comes with a temporary hit to our bottom line.”
Sector Dynamics and Competition
India’s quick commerce market has seen intense competition, with players like Blinkit (owned by Zomato), Zepto, and Swiggy Instamart all vying for dominance. Eternal’s entry marks a significant challenge to incumbents, given its established supply chain, brand recognition, and deep capital reserves.
However, analysts caution that the path to profitability in the quick commerce space remains uncertain. “It’s a high-burn model with thin margins. Eternal’s diversification makes strategic sense, but investors will be watching closely to see when and how this arm starts contributing positively to cash flows,” said Priya Ramachandran, retail sector analyst at Axis Securities.
Outlook
Despite the short-term pressure on profits, Eternal’s board reaffirmed its commitment to its multi-channel strategy and plans to invest an additional ₹1,200 crore in the next fiscal year toward scaling its quick commerce and omnichannel capabilities.
The company expects high double-digit revenue growth in FY26, buoyed by demand across its digital platforms and increasing traction in the rural market through its franchise-led model.
Shares of Eternal closed down 1.8% on the BSE on Friday following the earnings release, underperforming the benchmark Sensex, which ended flat.