The share price of Eternal (formerly Zomato) recovered slightly on Friday after the sharp sell-off on October 23. Ambit Capital reiterated its ‘Sell’ rating. The brokerage warned that high cash burn and heavy marketing spends continue to weigh on profitability even as Blinkit’s growth surged 137 per cent year-on-year.
Ambit’s October 20, 2025, report, titled “High cost of growth despite benign competition,” said Eternal has now logged its fifth straight quarter of below-consensus adjusted EBITDA, hurt by slower food-delivery recovery, persistent losses in Going-Out and Others, and cash burn of Rs 1,100 crore (INR 11 billion) in 1HFY26.
Ambit keeps ‘Sell’ amid cash burn
Ambit said food-delivery margins improved due to a 70-bps rise in take rate to a record 21.7 per cent, but gains were offset by rising discounts and 4 times YoY marketing spends.
“Costs of gaining market share remain elevated,” the brokerage noted, cautioning that new fund-raises by Zepto and Rapido, along with Amazon and Flipkart’s expansion, could push back profitability further.
Ambit on Eternal: Blinkit growth beats estimates
Blinkit’s net order value rose 137 per cent YoY, ahead of Ambit’s 123-per-cent forecast, yet margins slipped. Adjusted EBITDA losses stood at –1.3 per cent of NOV and –1 per cent of GOV.
The company’s shift to an inventory-led model that makes 80 per cent of business, higher store-expansion guidance to 2,100 stores in CY25, and 1.4× QoQ marketing spend slowed the profitability slope. Ambit now expects Blinkit to break even only by FY27.
Ambit on Eternal: Food delivery growth slows
Eternal’s core food-delivery business saw gross order value (GOV) up 18 per cent and NOV up 14 per cent YoY, below its 20 per cent guidance.
Margins, however, improved to 5.3 per cent of net order value (NOV) and 4.4 per cent of GOV, about 20 bps above expectations.
Ambit expects medium-term margins at 5–6 per cent, but says further take-rate hikes are unlikely as restaurants already face higher commissions while orders per restaurant remain flat at 250.
Ambit on Eternal: Marketing costs, competition rise
The brokerage said Eternal’s cash burn of Rs 1,100 crore and surging promotions highlight the steep cost of scale.
A $350-million fundraise by Rapido and its zero-commission model, together with Zepto’s expansion, could weigh on pricing and profitability.
Ambit noted that Eternal’s model “is neither low-capex nor working-capital-light,” implying sustained investment ahead.
Ambit on Eternal: Going-Out and Hyperpure weaken
Losses in the Going-Out segment widened to –33.3 per cent of sales from –26.1 per cent in Q1, while growth stood at 32 per cent YoY.
The Others category posted a Rs 55-crore loss, up from Rs 45 crore, and Hyperpure revenue fell 31 per cent YoY after switching to an inventory model.
Ambit valued the food ecosystem business Food Ordering, Going-Out, and Hyperpure at Rs 100 per share on a DCF basis.
Ambit on Eternal: Target price 2025
Ambit kept its target price of Rs 202per share, balancing Blinkit’s strong growth against weaker margins elsewhere.
At the current price around Rs 343, Eternal’s market capitalisation is Rs 2.77 lakh-crore ($32 billion), implying a 39-per-cent downside.
The brokerage said valuations already factor in a 27-per-cent Blinkit GOV CAGR FY25–40E and an exit EBITDA margin of 32 per cent.