Eternal’s Guidance: Real or Investor Bait?
1. Blinkit in 3 yrs: Ebitda Margin 0.3% → 5%; Sales 4X @ 60% CAGR
2. Eternal in 3 yrs: Ebitda → 7X @ $1B
3. Amazon Now 100 cities; Flipkart 1,500 dark stores; both can run @ Zero Ebitda
4. Why the hype? For exit liquidity?
FACTS:
Selling Future Dreams
a. Deepender Goyal: Eternal's Sales will be 2X in 2 yrs; Adjusted Ebitda will increase 7X in 3 yrs to $1 billion.
b. To achieve this Ebitda of $1B (₹9,400 crores), Blinkit’s Ebitda Margin must increase from the current 0.3% to 5%. (“More confident than ever” to achieve this margin, says CEO Albinder.)
c. Sales Maturity: Blinkit says its top 8 cities have 90% pin code coverage (means, already saturated). Sales growth of 60% CAGR will come from smaller cities (where consumption is low, margins are low, local kirana shops dominate.)
d. Blinkit has no moat, no pricing power, and faces high competitive intensity. Amazon Now announced yesterday they are coming to 100 cities with 1,000 micro-fulfillment centers. UBS note said Flipkart Minutes (Walmart) plans 1,500 dark stores in 2026.
e. How will Blinkit’s Ebitda margin grow from 0.3% to 5-6% (company’s guidance) when Amazon & Walmart have the reputation and capacity to operate at zero margins till competition is finished? Both global giants are still not profitable in India after decades.
f. Zomato Q4FY26: QoQ sales growth was negative @ -0.9%. Blinkit QoQ sales growth was only 8.2%. Even if we adjust for seasonal quarterly variations, it is going to be hard to achieve the following guidance:
Blinkit: Sales @ 60% CAGR for next 12 quarters.
➡️ To achieve this kind of sales growth, not only store count must increase every quarter, but also sales per store (sales per sq. ft.) must grow every quarter.
Eternal: Ebitda in 3 yrs @ $1 billion (7X of FY26 Ebitda) by FY29. It means, absolute Ebitda must grow @ 18% CAGR and Ebitda Margin must be 5% for next 12 quarters.
➡️ To achieve Ebitda margin expansion from 0.3% to 5%, Blinkit may have to sell mobile phones, televisions, and ACs, and not just groceries.
Mgmt Guidance vs. Our Estimate
Guidance:
Zomato Sales: 20% CAGR
Blinkit Sales: 60% CAGR
Ebitda Margin: 5-6%
Timeline $1B Ebitda: 3 YRS
Our Estimate:
Zomato Sales: 15% CAGR
Blinkit Sales: 40% CAGR
Ebitda Margin: 3-4%
Timeline $1B Ebitda: 6 YRS
INTERPRETATION: In our estimate, Eternal has priced in 6 years of future growth already (current PE is 1,027). So, for the PE multiple to normalize, the stock price may remain flat for the next 6 years.
Lack of Accountability
In the U.S., shareholders routinely come together to file class action lawsuits against companies for issuing over-optimistic forward-looking guidance.
When the company misses the guidance, the Board of Directors can be investigated to determine if their guidance was deliberately misleading to trap small investors.
In India, you may have to take your complaint to SEBI. But the entire financial ecosystem in India is designed to transfer the hard-earned wealth of small investors to the pockets of promoters and large operators.
Endquote
Warren Buffett: Life and Legacy (14 Jan, 2026, Premiered on CNBC)
Host: What do you think is stupid in business these days?
Buffett: I’ll give you an example. I think it’s very stupid for CEOs to emphasize during investor calls: “Here’s what we are going to do.”
Believe me, I've been on 20 corporate boards aside from Berkshire. I’ve seen a lot of that behaviour by CEOs. They do not realize the impact on millions of people when they play with numbers.
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