Should you invest in Zomato (Eternal Ltd.)? Stock Analysis by Finology

India’s largest food aggregator platform, Zomato (now Eternal Ltd.) has delivered a remarkable 60% CAGR returns in the last 3 years, with an exceptional 82% CAGR sales growth.

Finology Research Desk has analysed the company this week, providing a clear verdict on whether Eternal Ltd. is a good stock for long term or not. Find out in this article.

What makes the Online Food Delivery Industry special?

The Indian Online Food Delivery Market was valued at USD 30.81 Billion in 2024 and is expected to grow at a CAGR of 18.58%, reaching USD 120.44  Billion by 2032. This industry is experiencing significant growth, driven by increasing internet and smartphone usage, rising disposable income, a booming e-commerce sector, changing consumption habits and growing demand for convenience-driven services. Urban consumers, particularly in metro and Tier-1 cities, are the primary drivers of this demand. However, Tier-2 and Tier-3 cities are also increasingly contributing to the volume growth.

 

 

Source: Markets & Data

The overall food delivery market in India is currently a duopoly, dominated by Zomato and Swiggy, who hold 58% and 42% market share, respectively. Rapido, a ride-sharing platform, is also planning to enter the food delivery segment with the aim of disrupting this duopoly. Rapido is in discussions with restaurants in selected cities and is preparing to run a pilot test in Bengaluru, starting with quick service restaurants such as Domino's, McDonald's, KFC, etc.

 

 

In addition to the food delivery sector, India's quick commerce industry, which is focused on delivering groceries, daily essentials and other products (typically within 10 mins), is emerging as one of the fastest-growing segments in the e-commerce space. This market was valued at USD 3.49 billion in 2025 and is expected to reach USD 4.35 billion by 2030, growing at a CAGR of 4.5%. This growth is driven by rising consumer demand for speed and convenience, rapid urbanisation and the broader shift toward online shopping across the country.

 

Source: Mordor Intelligence

The operational backbone of quick commerce industry lies in the use of dark stores—which are strategically located warehouses in high-demand areas. These dark stores are designed for quick picking, packing and dispatch of the orders. When a customer places an order through an app, the nearest dark store processes it immediately, and a delivery partner transports the order, often in under 10 minutes. This hyperlocal model enables ultra-fast delivery while maintaining operational efficiency and localisation.

Currently, Blinkit (Eternal’s brand) leads the quick commerce market with a market share of 46%, followed by Zepto at 29% and Instamart at 25%. As competition intensifies, these players are aggressively eying market share gains based on factors such as price, product variety and service availability.

Parallel to these developments, India’s online event ticketing market is also experiencing significant growth. Valued at USD 3.31 billion in 2024, this market is projected to reach USD 7.10 Billion by 2033, growing at a CAGR of 8.90%. This growth is driven by the rapid expansion of digital infrastructure in India, including increasing smartphone adoption and widespread internet access. As a result, more consumers are turning to online platforms to book event tickets, attracted by the convenience of mobile apps, secure payment gateways, and seamless user experiences. BookMyShow, a pioneer and market leader in this space, continues to shape the competitive landscape through its comprehensive offerings, strategic partnerships, and a user-friendly interface. While emerging platforms and tech startups present growing competition, BookMyShow retains its lead through strong brand loyalty and continued investment in user experience and innovation.

These overlapping growth areas highlight a broader digital shift in India’s consumer services landscape. The adoption of advanced technologies is enhancing both operational efficiency and user experience across various sectors. As more consumers, especially in urban and semi-urban areas, embrace mobile platforms, companies are adapting their strategies to capture the expanding market.

Business Model of Zomato

Founded in 2008 by Deepinder Goyal and Pankaj Chaddah as Foodiebay, it initially began as a restaurant aggregator, providing menu information, user reviews, and recommendations to customers. In 2010, it was rebranded to Zomato to broaden its appeal beyond just food-related listings and expand into restaurant reservations and food delivery business.

Since then, Zomato has grown into a leading technology platform for food delivery and dining services in India. It entered the food delivery space in 2015, which soon became its core business. As of 2024, Zomato operates in over 800 cities across India, offering food delivery, table reservations, and dining-out services, along with restaurant discovery and table reservation services in the UAE.

In addition to its core offerings, the company has diversified; with Blinkit, a quick commerce platform delivering groceries and essentials within 10 mins, and Hyperpure, a B2B supply chain service supplying fresh ingredients and kitchen essentials to restaurants and other B2B buyers.

In 2024, the company rebranded itself from Zomato to Eternal, marking a shift from a food tech brand to a more diversified consumer-focused platform.

Key Business Segments of Zomato (Eternal Ltd.)

 

 

Source: Investor presentation Q3 FY24

A. Food delivery - Zomato operates a B2C technology platform that enables customers to conveniently search and discover local restaurants, order food online, and have it delivered quickly. The food is prepared by partner restaurants and delivered reliably by Zomato’s network of delivery partners.

B. Quick commerce - Through a separate app named Blinkit, Zomato offers rapid delivery of thousands of products across multiple categories such as fresh produce, staples, electronics, beauty, general merchandise, over the counter medicines typically under 10 minutes. Orders are fulfilled via a network of dark stores and delivered by independent delivery partners. 

C. Going out - This B2C segment caters to the ‘going-out’ needs of the customers. It includes dining out and ticketing services. The dining out service allows customers to search and discover restaurants, read and write reviews, view and upload photos, reserve tables and make payments while dining in at restaurants in India and UAE. 

Prior to entering the mainstream ticketing business, Zomato operated Zomato Live, a vertical focused on hosting and promoting its own curated events. A flagship example is Zomaland, a large-scale food and entertainment carnival held across multiple cities in India. These events were marketed and ticketed through Zomato’s main platform, offering users a unique live experience.

To scale this effort, Zomato acquired Paytm’s ticketing business, which included Paytm Insider’s infrastructure in the live entertainment and event space. This acquisition significantly strengthened Zomato’s presence in the ticketing vertical and led to the launch of a dedicated app called, District by Zomato, which now allows users to explore and book tickets for a wide range of events, live experiences and movies in India.

D. Hyperpure (B2B supplies) - Launched in 2019, Hyperpure is Zomato's B2B supplies business which is focused on delivering quality food ingredients and other essentials to restaurants and other businesses across India. It addresses the industry's longstanding sourcing challenge, as the B2B supplies market in India is highly fragmented and unorganised, often resulting in inconsistent product quality and availability.  

By sourcing fresh, high-quality ingredients directly from farmers, mills and producers, Hyperpure aims to enable restaurant partners to build more efficient and reliable supply chains and improve the quality of food they serve. Restaurants that use Hyperpure receive a “Hyperpure Inside” tag on their Zomato profiles, signalling the customers that the restaurants use trusted and quality ingredients. 

Revenue Mix of Zomato (Eternal Ltd.)

 

 

Source: Finology Research Desk, Annual Report FY24

Eternal derives the majority of its revenue from its food delivery business, which contributed about 52.5% to the total revenue in FY24. This includes income from customers orders placed through the platform along with commissions charged to partner restaurants.

The Hyperpure segment - Eternal’s B2B initiative, accounted for 26.2% to the revenue, highlighting the company’s expanding role in the B2B food supply chain beyond its consumer facing operations.

Quick Commerce, one of the fastest-growing segments of Zomato, contributed 19.0% to the revenue. This segment is experiencing rapid growth driven by growing demand for convenience and ultra-fast deliveries in India

The Going-Out segment, which includes services like restaurant discovery, table reservations and ticketing services, contributed about 2.1% to the total revenue, reflecting a relatively smaller but a growing component of Zomato’s business model.

Overall, the service-based segments made up 73.82% of the total revenue, reflecting its service-oriented model, while product-based segments contributed the remaining 26.18% to the company’s revenue.

Cost Mix of Zomato (Eternal Ltd.)

 

 

Source: Finology Research Desk, Annual Report FY24

Eternal’s cost of goods sold (COGS) increased by 107% YoY from 1,395 Cr. in FY23 to 2,882 Cr. in FY24. This sharp increase was primarily driven by the Hyperpure segment,  where COGS increased in line with the segment's growing revenue base.

Employee benefits expenses increased by 13% YoY from 1,465 Cr. in FY23 to 1,659 Cr. in FY24, which was driven by salary increments and the addition of new employees across Zomato’s business units. These expenses include salaries, wages, bonuses and other share-based compensation.

Finance Costs increased by 47% YoY, reaching 72 Cr. in FY24 compared to 49 Cr. in FY23. This rise was primarily due to higher interest on lease liabilities, linked with rapid expansion of the Blinkit store network, which grew from 377 stores in FY23 to 526 stores in FY24.

Depreciation and amortisation expenses increased 20% YoY from 437 Cr. in FY23 to 526 Cr. in FY24, largely due to higher depreciation charges linked to the scaling of the Blinkit store network.

Other expenses grew by 39% YOY, rising from 5,429 in FY23 to 7,531 in FY24. This increase was primarily driven by:

• A 54% rise in delivery & related charges, resulting from higher order volumes and an increase in free deliveries through the Gold program. 
   
• A 17% increase in advertisement & sales promotion expenses, reflecting enhanced investment in marketing, branding, and customer incentives. 
   
• A 43% increase in other operational costs which was driven by higher logistics and warehouse management costs, and rental expenses associated with quick commerce.

Eternal reported a Net profit margin of 2.71% in FY24, compared to -12.51% in FY23, marking its first full year of profitability after years of consistent losses. This change was driven by reduced losses in the quick commerce segment and an improvement in margins.

Overall, Eternal’s expenses have been fluctuating significantly over the past five years relative to the revenue, which indicates inconsistent cost control and a lack of operational stability across Zomato’s business segments.

Porter’s 5 Forces Analysis of Zomato

 

 

Source: Finology Research Desk

1. Moderate Threat of New Entrants: Entering the food delivery space is not easy due to the less capital-intensive nature of th business. However, the complexity of handling the operations makes it difficult for any new entrant to scale the business. Building the necessary logistics infrastructure, technology, and restaurant partnerships creates high entry barriers for new players. The food delivery market is largely dominated by Zomato and Swiggy, while Blinkit leads in quick commerce. Although new players may emerge in individual segments, matching Eternal’s scale, brand recognition and integrated ecosystem remains a significant challenge.

2. High Bargaining Power of Customers: Customers in the food delivery and quick commerce sectors hold high bargaining power due to the availability of various alternatives and low switching cost between platforms. Their sensitivity to price, delivery speed and promotional offers compels Zomato to consistently offer discounts, subscriptions and a seamless service to retain customers. On the B2B side, restaurants sourcing ingredients through Hyperpure can easily switch to traditional wholesalers or emerging players like Swiggy Assure, increasing competitive pressure on Zomato.

3. High Competition in the Market: The Indian food delivery market is essentially a duopoly with Zomato and Swiggy holding 58% and 42% market share respectively. This results in intense competition across pricing, delivery speed and restaurant partnerships. Although Zomato’s acquisition of Uber Eats India eliminated one competitor, its battle with Swiggy remains intense. Adding to this pressure, emerging players like Rapido are set to enter the food delivery space, intensifying the competition further. 

In the quick commerce segment, Blinkit faces strong competition from Swiggy Instamart and Zepto. Similarly, in restaurant reservations, platforms such as EazyDiner and Dineout compete for consumer attention. On the B2B front, Zomato’s Hyperpure is now competing with Swiggy Assure which has recently entered the B2B supply segment. Even in the ticketing space BookMyShow continues to dominate, leaving little room for its competitors.

4. Moderate Bargaining Power of Suppliers: Zomato works with a variety of suppliers across different areas, including restaurants, FMCG companies through Blinkit, and food producers through Hyperpure. The bargaining power of these suppliers is moderate, and it depends on the size and importance of the partnership. Smaller and mid-sized restaurants depend a lot on Zomato for visibility and online orders, which gives Zomato an advantage in negotiations. On the other hand, larger restaurant chains with strong brand recognition and loyal customers can negotiate better terms. In the grocery delivery business, Blinkit works with several FMCG brands who also supply to competitors like Swiggy Instamart and Zepto, so these suppliers hold some bargaining power. However, Zomato’s large operations and wide supplier base help balance this power overall.

5. Moderate Threat of Substitutes: While no single alternative replicates Zomato’s comprehensive ecosystem, customers and partners can turn to substitutes within individual segments:

• Food delivery can be replaced by home cooking, dining out, or direct restaurant delivery..
• Restaurant discovery and table reservations face competition from Google reviews, social media platforms or direct restaurant bookings..
• Quick commerce competes with local kirana stores and supermarkets.
• Hyperpure’s B2B supplies can be substituted by sourcing from local wholesalers.

Although alternatives exist in each vertical, Zomato’s convenience and integrated user experience reduce the likelihood of widespread substitution, resulting in a moderate threat of substitution in the market.

Why did we reject Zomato (Eternal Ltd.) for Finology 30?

1. Low brand loyalty - The online delivery industry, whether food delivery or quick commerce, has less customer loyalty. Most customers look for better offers on different platforms, compare them, and then order from the platform where they get the best deal. This creates a continuous need for the company to offer services at competitive prices compared to its peers. Loyalty towards the brand is therefore lower, and it poses a risk that the company may be unable to command higher prices to run at sustainable profit margins in the long run. 

2. Large-scale operators preferring their own app models: Once a restaurant chain gets good brand recognition, they try to reduce getting orders in their restaurants from food aggregator platforms. This is because orders from food aggregator platforms are margin dilutive due to their take-rate charges. For example, Domino’s has its own app for food delivery and generates ~82% of its online orders from its own app. This helps the brand maintain higher profitability. Thus, Zomato faces the risk of losing business from branded players and established large-scale food chains.

The Bottom Line

For Finology 30, our ideology has been to focus on business models with a strong moat and strong management pedigree.

For now, Eternal Ltd. failed to pass our investment checklist. So, for now, we decided not to go ahead with Eternal Ltd.