Indian online delivery platform Eternal’s quarterly profit rises sequentially

Indian online delivery platform Eternal reported a sequential rise in its quarterly profit on Thursday, driven by surging demand for its quick commerce business.

The firm, which also runs the food delivery arm Zomato, reported a profit of 650 million rupees ($7.4 million) in the three months to end-September, compared to 250 million rupees in the previous quarter and 1.76 billion rupees a year ago.

India’s quick commerce industry, which promises to deliver everything from milk to iPhones in 10 minutes, has seen an investment frenzy but the race to expand and grab market share has weighed on profitability.

Despite rising revenue, Eternal’s margins have shrunk while losses for its peer Swiggy have widened.

Analysts expect margins and profitability at Eternal to improve gradually as discounting at its quick commerce arm, Blinkit, eases and improving reach brings down cost per order.

The adjusted core loss at Blinkit narrowed to 1.56 billion rupees from 1.62 billion rupees in the previous quarter. However, it fell short of expectations of ICICI Securities and Elara Capital that had projected the losses at 1 billion rupees.

Blinkit’s adjusted loss margin improved to 1.3% from 1.8% in the first quarter, but was below the company’s expectation, Eternal said in a letter to shareholders.

“This was largely driven by our investments to drive higher growth and net order value market share opportunistically,” the company said, flagging a lower but still-strong competitive intensity.

Blinkit spent more on marketing compared to last quarter and accelerated its store expansion, It expects to reach 2,100 stores by December from 1,816 stores at end September.

Shares of the company were choppy, rising as much as 4% after the results, and ending down 3.9%.