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Eternal LtdQ3 FY23

Eternal Ltd

Q3 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 2
- Zomato expects continued high growth in Blinkit, maintaining the current quarterly growth rates in order volumes and revenue. (Page 6-7) - Food delivery business is projected to grow 25%-30% YoY next quarter, considered moderate relative to sell-side expectations. (Page 6-7) - Monthly transacting customers (MTCs) are expected to grow long-term, though the quarter-on-quarter pace may vary due to demographic and macro factors. (Page 12-13) - Blinkit's dark store expansion and new city entry will further drive growth, though new store additions can temporarily drag contribution margins. (Page 5-7, 14-15) - Pricing strategies, including sharper pricing for Zomato Gold, aim to improve margins without compromising growth. (Page 15) - Loyalty program growth (Zomato Gold) is still ongoing but expected to slow as frequent users saturate. (Page 8) Overall, growth will be driven by increasing customer base, store network expansion, improved monetization, and evolving pricing strategies.

Margin guidance

Category 3
  • →Zomato expects **continued growth in monthly transacting customers (MTCs)** to drive order volume growth long-term, though quarter-on-quarter growth may not be linear (Q13).
  • →The company aims for **4%-5% EBITDA margins** eventually, indicating expansion in margins alongside growth (Q13).
  • →Blinkit expects to maintain **high growth rates** similar to recent quarters with ongoing dark store expansions and incremental store additions (Q6, Q15).
  • →Incremental margins are expected from **platform fees and ad monetization** which are helping increase contribution margins (Q7).
  • →Zomato plans **aggressive but sharper pricing strategies for Zomato Gold** going forward to reduce funding gaps and improve incremental margins (Q15).
  • →The company remains focused on **growth in absolute contribution profit over contribution margin percentage** (Q13).
  • →No immediate changes expected in capital allocation despite positive free cash flow; potential for **selective new investments or acquisitions** in future (Q5).

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Fundraise plans

  • →There is no mention of any current or future new fundraising through debt or equity in the provided transcript.
  • →Akshant Goyal explicitly states there is no update on capital allocation or plans for new spending, large acquisitions, or returns of cash at this point (Page 5).
  • →The management has not provided any guidance or commentary related to upcoming fundraising activities in either equity or debt markets throughout the call.
  • →The focus appears to be on achieving profitability, margin improvement, and growth through operational means rather than raising new capital.

Order book

The provided transcript from the Zomato Q2FY24 earnings call does not mention any details about the current or expected order book or pending orders. The discussion primarily focuses on: - Blinkit's fixed costs and dark store expansion strategy. - Aggressive pricing and contribution margin expectations for Zomato Gold. - Competitive dynamics in quick commerce versus food delivery. - Growth outlook and market share insights. - Financial metrics like take rates, advertising revenue, and working capital. - Loyalty programs and platform fee strategies. No specific information on order books or pending orders was disclosed during the call.

Capex plans

Yes
  • →No specific updates on new capital allocation plans or large acquisitions at this point (Page 5).
  • →Positive free cash flow noted in first half and Q1, Q2 FY24, but no change in capital allocation strategy yet (Page 5).
  • →Blinkit expansion involves new store additions, with 69 stores planned over next two quarters; short-term margin drag expected due to new store costs (Page 5).
  • →Focus remains on building a long-term sustainable business rather than accelerating profit breakeven aggressively (Page 5).
  • →No new loyalty program planned for Blinkit currently, suggesting limited near-term strategic investments in this area (Page 3).
  • →Synergies achieved in infrastructure and sourcing between Hyperpure and Blinkit to optimize capex and operations (Page 9).

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