Eternal Ltd — Q4 FY26

Eternal Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Ppt5DIdM-HM Published: 2 weeks ago

0:03 3 seconds Ladies and gentlemen, a very good evening and welcome to Eternal Limited's Q4 FI26 earnings conference call. From Eternal's management team, we have with 0:12 12 seconds us today Axan Goyel, Albinda Singh Dinsa and Konal Rup. Before we begin, a few quick announcement for the attendees. 0:20 20 seconds Anything said on this call which reflects outlook for the future or which could be construed as a forward-looking statement may involve risk and 0:27 27 seconds uncertainties. Such statements or comments are not guarantees of future performance and actual results may differ from those statements. 0:35 35 seconds Additionally, please note that this earnings call is scheduled for a duration of 45 minutes and we will be starting directly with the Q&A section of the call. If you wish to ask a 0:44 44 seconds question, please use the raise hand feature available on your Zoom dashboard. We will announce your name on the call and unmute your line post which you can proceed with your question. 0:53 53 seconds You'll wait for a minute while the question queue assembles. 1:10 1 minute, 10 seconds The first question is from the line of Gorov Malotra from Access. Please go ahead. 1:16 1 minute, 16 seconds Yeah. Hi. Uh thank you for the opportunity. I had uh I had three questions. Uh so first question uh is is 1:23 1 minute, 23 seconds on the overall IITA uh guidance of or indication of say a billion dollars by 29. Now we do know that you know food is 1:32 1 minute, 32 seconds is is sort of at a steady clip uh and it's also growing at that 19 20%. You know we do know about district uh you 1:42 1 minute, 42 seconds know eida guidance of FI30. So if I just take sort of strip it back right then essentially and we know what is the NOV 1:51 1 minute, 51 seconds growth of uh CG of 60% for quick commerce then the implied margin for quick commerce comes to around say 1:59 1 minute, 59 seconds roughly 3% 3 three and a half% give or take so is that the number which we are expecting from a margin perspective in 2:07 2 minutes, 7 seconds the say next 3 four years yeah broadly I think uh broadly the maths is fine We're not giving any 2:15 2 minutes, 15 seconds specific guidance but and therefore it could uh the numbers could move a little bit depending on how things pan out but 2:23 2 minutes, 23 seconds yeah broadly the way you did did the maths it's broadly in line with how we're thinking about it. 2:28 2 minutes, 28 seconds Thank you. Just two quick uh more questions. You know we see that your fixed cost in uh quick commerce uh has 2:36 2 minutes, 36 seconds been sort of flattish this quarter and yet the MTU numbers have been quite quite strong. So just wanted to get a sense as to you know how to sort of 2:44 2 minutes, 44 seconds reconcile these two numbers. And the second question is just on the dark stores. Uh you know I remember you had mentioned that maybe you'll pick up the 2:51 2 minutes, 51 seconds number the the additions in this quarter but sort of flattish again. So just wanted to get a sense on uh the tax guidance of 3,000 by March. These are the these are the only two questions. 3:03 3 minutes, 3 seconds Yeah. Yeah. So, Gorov, I think the fixed cost uh I mean like the the MTO edition remains strong because uh we continue to spend uh on marketing uh for new new 3:13 3 minutes, 13 seconds customer acquisition. So, I think those spends uh haven't come down in the last quarter and and hence uh the overall fixed cost remains in line with the 3:21 3 minutes, 21 seconds previous quarter and the MTO edition also remain strong. Right? So, we seeing I think uh a lot of our competitors in 3:29 3 minutes, 29 seconds the market we feel have pulled back on this. So we we're seeing extremely low cost of customer acquisition and and we continue to see therefore value in 3:38 3 minutes, 38 seconds keeping the marketing spends high at this point. Uh on on the store edition, I think we're on track on our guidance 3:45 3 minutes, 45 seconds for March for 3,000 stores. I think we remain firmly on track and and beyond that like I I don't think beyond that uh 3:54 3 minutes, 54 seconds we're going to give any guidance or at least this point we don't think it makes sense. I think we've given overall guidance of 60% kagger and and that 4:02 4 minutes, 2 seconds would uh obviously mean uh uh some reasonable store expansion but we're not uh planning to give out any specific number guidance on that. 4:13 4 minutes, 13 seconds So uh just uh just a follow up. So essentially if 3,000 store happens that means uh the the the general growth for 4:21 4 minutes, 21 seconds FI27 uh will not be 100% as you had indicated earlier it'll be say in the 70 to 80% print right is is the understanding 4:29 4 minutes, 29 seconds correct yeah it will not be 100% but we are not guiding to a specific number yeah I think we need that flexibility in the medium-term and short term to respond to 4:38 4 minutes, 38 seconds how the market dynamics are and and hence and but we know that you know street is looking for some guidance what we've done here is actually given a more 4:46 4 minutes, 46 seconds longerterm three-year guidance and and I think shortterm we will respond to the market situation and if there are opportunities for acceleration we'll do 4:55 4 minutes, 55 seconds that uh right so so we we not uh we're not closing the door on any options for us now in the next 12 months 5:02 5 minutes, 2 seconds thank you so much thank you next question is from the line of Manish Adupia from Goldman Sachs 5:10 5 minutes, 10 seconds please go ahead thank you hi good afternoon thank you for taking my questions uh my first question is actually a follow on from Gorov's previous question. Uh so Axant 5:18 5 minutes, 18 seconds uh like Gorov asked the 100% guidance now does not hold true for F27 uh given what you saw in the market in terms of 5:25 5 minutes, 25 seconds competition etc. So now when you give your medium-term guidance of 60% CAGGR, what margin of safety or room [clears throat] for error are you 5:34 5 minutes, 34 seconds building in that guidance? I mean if competition were to remain as is or were to get slightly worse from here, what 5:42 5 minutes, 42 seconds are the range of outcome for that 60% CG? And the reason I'm asking is that because from a near-term perspective, you can maybe help us understand the building blocks as to where you could 5:50 5 minutes, 50 seconds see the next three-ear growth end up to get to that 60%. That may help us, you know, just a build just build that number a light a little bit more conviction. Uh that's my first question. 6:00 6 minutes Yeah. Hi Manish. So I think we've addressed that in question three of the letter. I think we've sort of tried to give you the building blocks of what the 6:07 6 minutes, 7 seconds 60% kagger uh guidance sort of is is is uh based upon. So it's it's a function 6:14 6 minutes, 14 seconds of uh assortment expansion, geographical expansion as as well as more you know dens demand densification in in our uh 6:24 6 minutes, 24 seconds in our cities of presence today and and and we might also get into newer cities right so you know we think three year 6:32 6 minutes, 32 seconds out uh you know any sort of like increase or or uh uh intensifying of 6:39 6 minutes, 39 seconds competitive activity I I don't think we don't think it's going to beyond the 3-ear period that you have mentioned. So we feel fairly comfortable 6:47 6 minutes, 47 seconds and confident that over a period of 3 years we should be able to deliver this gagger of growth. 6:54 6 minutes, 54 seconds Sure. And thank you Akan for that. And maybe where I was coming from also was the building blocks in terms of and I know you don't want to give like a three-year store guidance, but if you 7:02 7 minutes, 2 seconds were to think about user growth versus frequency versus average order value, if you can maybe give us a pecking order of what drives the most amount of growth 7:10 7 minutes, 10 seconds versus followed by the second followed by the third that would also be helpful. 7:14 7 minutes, 14 seconds Yeah, we don't we can't project with that accuracy at this point unfortunately. So we we we are also learning as we building this market, right? So so these things might change. 7:23 7 minutes, 23 seconds So we don't want to put out numbers here which we then have to define in the next call right uh but let me just last question on that topic from a user number 7:31 7 minutes, 31 seconds perspective given that there is a fair bit of competition and there are like a few well capitalized players in the market and given as the market already is today you don't see a concern in 7:41 7 minutes, 41 seconds terms of empty or user penetration reaching closer to saturation levels in the foreseeable future no we don't 7:48 7 minutes, 48 seconds very clear thank you second question on the June quarter where you're saying a meaningful full expectation of acceleration in quarteronquarter growth 7:56 7 minutes, 56 seconds outside of the reversal of average order value and the fewer days that you had in the March quarter. Are there any other drivers that we need to be aware of whether it's greater store ads or 8:04 8 minutes, 4 seconds anything else or it's just these two factors of AOV and fewer days. 8:10 8 minutes, 10 seconds So, so the only weather factor will be seasonality, right? So, it's it's a different season. So, we see uh different consumption patterns and uh 8:17 8 minutes, 17 seconds summer drives growth in certain categories. So, overall that will also lead to a uh slightly higher growth other than the two you mentioned. 8:28 8 minutes, 28 seconds Very clear. Uh thank you. Those are the questions that I had for now. I'll jump back in the queue. Thank you. 8:34 8 minutes, 34 seconds Thank you. Next question is from the line of Adata Sman from CLSA. Please go ahead. 8:42 8 minutes, 42 seconds Yeah. Hi. Uh good evening. Uh so two questions. So firstly uh when we look at the contribution per order in the quarter, we've seen a slight dip. Uh 8:50 8 minutes, 50 seconds this is largely a function of AOV or or uh which which obviously falls seasonally or anything more to read in the sort of drop in contribution per 8:58 8 minutes, 58 seconds order. And and then the second uh question on on the food side uh we've seen Swiggy uh sort of roll out toying 9:07 9 minutes, 7 seconds quite aggressively uh which is uh uh which which uh is is is obviously a different model with a different sort of 9:14 9 minutes, 14 seconds price structure. uh any plans for uh eternal to do the same or or what do you think of bro as being that uh uh uh 9:23 9 minutes, 23 seconds being that option for affordability on the food therapy side and if bes is the option there any sort of uh updates on how that business is doing 9:31 9 minutes, 31 seconds uh so on contribution I think I there multiple things that change sequentially quarter on quarter yeah so you mentioned 9:38 9 minutes, 38 seconds AOV that is one right but u I mean I'm not we're not saying I mean that was the key driver but there are other things 9:44 9 minutes, 44 seconds also which keep changing. Uh last mile delivery is also seasonal in some ways. 9:49 9 minutes, 49 seconds Availability changes with uh the supply of delivery partner changes uh during 9:56 9 minutes, 56 seconds different months in the year. Uh and some of the other things like supply chain cost etc. there could be efficiencies 10:04 10 minutes, 4 seconds uh that we are banking in but net I think the movement is what you see in contribution overall that doesn't change the trajectory of our business like so 10:13 10 minutes, 13 seconds more longer term I don't think there's anything to call out here uh understood so in in other words as a goes up and some of the seasonality 10:21 10 minutes, 21 seconds changes your contribution direction should be upwards at least for now right as as we move to five six% margin here 10:29 10 minutes, 29 seconds that we are saying we will get to at some point contribution margin will go up right and and on a year-on-year basis 10:36 10 minutes, 36 seconds we'll see that trend consistently and and if you were to help with that I mean so you're you said that in NCR you're doing 5 6% margin so which would 10:44 10 minutes, 44 seconds imply like the contribution there is 8 9% would that be the right assumption or or even higher we are not just sharing that data point 10:52 10 minutes, 52 seconds I don't think it matters also but yeah broadly it'll be somewhere in that range understand and then maybe on bro and and toying. 11:01 11 minutes, 1 second Yeah. So I think so we I mean at this point we don't have any plans to uh do what uh Swiggy is doing with toying. Uh 11:11 11 minutes, 11 seconds we're not clear on what problem it solves for for consumers or for restaurants right so till the time we 11:18 11 minutes, 18 seconds don't get the clarity uh I think we'll just stay put on on our focus areas which is a zumato and I think visro is 11:26 11 minutes, 26 seconds still a small experiment for us. So we we're seeing early signs of of uh a business model evol evolving there but 11:34 11 minutes, 34 seconds still very small and and early. So I won't uh I won't want to uh showcase Bisro as as as a big bet at this point. 11:43 11 minutes, 43 seconds Uh but I think yeah we are watching the space and we are seeing what competition is doing and if at any point we see uh a thesis there that makes sense that 11:52 11 minutes, 52 seconds unlocks a new market uh yeah I will will follow suit. 11:57 11 minutes, 57 seconds very clear. Thanks Ashant. Yeah, thank you. 12:02 12 minutes, 2 seconds Thank you. Next question is from the line of Ankor Rudra from JP Morgan. Please go ahead. 12:08 12 minutes, 8 seconds Hey, thank you and thank you for the targets on growth and profitability this time. Um firstly in terms of uh you know the 60% growth guidance and thank you 12:16 12 minutes, 16 seconds for the color in terms of the building blocks but in the more near term are you seeing any signs of competitive activity 12:23 12 minutes, 23 seconds or early signs of competitive activity easing which gives you any kind of visibility of this you know starting to play out from the next couple of quarters. 12:33 12 minutes, 33 seconds Hey Ankur Albindra so competitive activity hasn't meaningfully changed from when the last time you were on a 12:39 12 minutes, 39 seconds call. Um and I think uh our stance about it is also the same that we will sort of keep an eye out for it uh but do the 12:47 12 minutes, 47 seconds right things for the business uh and to the extent uh you know we've mostly delivered on what we thought we would be 12:54 12 minutes, 54 seconds able to accomplish in face of whatever the competition is going on and uh whatever guidance you're giving we're not really changing our outlook on that either. 13:03 13 minutes, 3 seconds super helpful in the you know you've given a three-year guide this time if I look at the last two three two to three years there's been a significant amount of linearity between store editions and 13:11 13 minutes, 11 seconds growth is there anything to suggest that that will change over the next 3 years 13:18 13 minutes, 18 seconds I mean it's not a uh straightforward uh comparison I think uh we still in some parts of the network we are still in a store buildout phase uh in some other we 13:27 13 minutes, 27 seconds just have to create supply in different ways to to service customers when we are expanding assortment So our job is to make sure that the 13:34 13 minutes, 34 seconds supply is there whether it's in you know uh smaller stores bigger stores I think that number becomes very complicated if you start doing the math that way so 13:42 13 minutes, 42 seconds it's hard to quantify it in that simplistic way appreciate the color just finally in terms of profitability for blinket you 13:50 13 minutes, 50 seconds know approximately 3% is what you you've said it seems broadly fine what are the biggest unlocks for you either in terms 13:57 13 minutes, 57 seconds of cost or monetization to get there on a three-year basis I think so far we are not really 14:04 14 minutes, 4 seconds assuming any further unlocks uh which would really do it. I think if we just keep doing our job and executing uh the way we are doing we should be able to get there. 14:15 14 minutes, 15 seconds Okay. Thank you. 14:18 14 minutes, 18 seconds Thank you. Next question is from the line of Abhishek Banerjee from ICICI securities. Please go ahead. 14:25 14 minutes, 25 seconds Hey. Hi. Uh congrats on a on a great set of numbers. Uh first on on the growth in quickcommerce, you seem to be uh still 14:34 14 minutes, 34 seconds growing ahead of the market. Uh uh so so do you uh do you uh think that you know when you say about 60% NOV growth going 14:43 14 minutes, 43 seconds ahead? Are you actually happy to grow in line with the market uh in the future? Uh and and uh you know why why is that? 14:52 14 minutes, 52 seconds And uh I had have another question which is slightly backwardlooking. Uh so uh now that you have you know you have 14:59 14 minutes, 59 seconds achieved profitability rather steadily so what do you think is the most non-negotiable KPI that you have to crack in order to 15:08 15 minutes, 8 seconds get get to profitability in uh uh QC is it orders per day per store or is it uh your NOV number? 15:17 15 minutes, 17 seconds Um so Abishek uh I think to your first question right uh I think we are in a fairly uh competitive market with a lot 15:26 15 minutes, 26 seconds of different players uh in that market it is hard to figure out you know what is the actual market growth rate apart from the two public players who actually 15:34 15 minutes, 34 seconds have to share the numbers so it's very hard to be able to say that you know where this is where the market is growing at is it a healthy growth rate 15:41 15 minutes, 41 seconds is you know um or it's an unhealthy growth rate I think we are more concerned with whether our quality ity of growth uh is maintained as we grow 15:50 15 minutes, 50 seconds and I think that's our biggest uh that's actually something that the only thing that we worry about and I think going 15:57 15 minutes, 57 seconds forward also um I think quality growth uh which actually meaningfully also takes the business 16:05 16 minutes, 5 seconds towards uh profitability and sustainability I think that is the only non-negotiable here and I mean there 16:12 16 minutes, 12 seconds multiple ways to get there but uh I think that's the only non-negotiable Got it. Thanks. 16:26 16 minutes, 26 seconds Thank you. Next question is from the line of Sil Port Duk from JM Financial. Please go ahead. 16:35 16 minutes, 35 seconds Hi. Uh thanks for the opportunity. Uh my first question is with respect to your warehousing capacity. Uh you talked about 17 million of warehousing capacity 16:43 16 minutes, 43 seconds spread across dark stores and supply chain. uh other hubs etc. Can you give a sense as to what was the number a 16:51 16 minutes, 51 seconds quarter back or a year back? uh the reason I'm asking is uh is like it will help us understand like what kind of an oper you can uh get from uh by just uh 17:00 17 minutes utilizing the capacity or or even if the uh addition slows down going it thanks we don't disclose that 17:09 17 minutes, 9 seconds that disclosed so you don't find it in a letter it's not a mess [laughter] 17:17 17 minutes, 17 seconds okay got it got it but uh uh the other number I was tracking was your orders per day per pto I mean that number has 17:24 17 minutes, 24 seconds been broadly flat for a long period of time any sense as to when we can see some uplift in that number because I 17:32 17 minutes, 32 seconds mean presumably that is where you'll get a decent bit of operating so see as Albundar mentioned I think 17:39 17 minutes, 39 seconds like the contours of risk the business might keep on changing right so we are not hung upon like certain metrics going in a certain way for the business to 17:48 17 minutes, 48 seconds work right so I think uh you know there could be arguments to be made on why that number I mean for for that number 17:56 17 minutes, 56 seconds to not go up and still the business might deliver five six% margin right that's also possible so so I think uh you know we so we're not therefore uh 18:05 18 minutes, 5 seconds constraining ourselves into a certain way of thinking about the business I'm not saying that this metric will not go up but I'm saying that the reason we not 18:13 18 minutes, 13 seconds providing a guidance for this metric and how this will trend up and instead we're giving a guidance of the overall growth of the business is because these variables and the building blocks of how 18:22 18 minutes, 22 seconds we look at the business might might evolve as we go along right so it's a good number to track that's why we disclose it but uh you know we are not 18:30 18 minutes, 30 seconds sure of like how this will trend and therefore we don't want to give a guidance on it right got it uh this uh this this one metric 18:39 18 minutes, 39 seconds another metric that I track is like customer retention uh the number of orders that every customer gives you that number seems to have come down off 18:47 18 minutes, 47 seconds for the last couple of quarters it used to be around 3.6 six. Now it is down to 3.35. Is that to do with uh some 18:54 18 minutes, 54 seconds retention getting impacted because of high competitive intensity or is is it a function of significant addition in new 19:02 19 minutes, 2 seconds customers and their uh ordering frequencies being lower? Yeah, it's largely the lack of I think we haven't 19:09 19 minutes, 9 seconds seen uh too much impact on customer retention uh despite uh us being sort of more competitive I mean more like more 19:18 19 minutes, 18 seconds expensive for customers in certain geographies. So I think most of this is uh on account of uh the acceleration in new customer edition that we have seen the last couple of quarters. 19:29 19 minutes, 29 seconds But and just uh on your food daily commentary now you did say that you have been offering a lower moes of around 99 19:39 19 minutes, 39 seconds to make food more affordable. Uh but at the same time you have been consistently increasing your platform fees you know 19:45 19 minutes, 45 seconds those kind of things. So how does that tie up? I mean uh like right if you were to make it affordable you should not be increasing platform fees. 19:56 19 minutes, 56 seconds Yeah. So I think what what we mean by by that see the platform is applicable to all customers but the uh the the offers 20:05 20 minutes, 5 seconds or or discounts can be targeted to a certain cohort of customers who are more price sensitive right or or in certain 20:11 20 minutes, 11 seconds locations and geographies where uh these subsidies actually deliver growth right so so that doesn't work for all customers or all geographies but I think 20:20 20 minutes, 20 seconds what we're doing trying to do essentially is increase the overall revenue per order by increasing the platform fee and then then channel that 20:28 20 minutes, 28 seconds revenue uh to select cohort of customers in select geographies [clears throat] where we are seeing uh growth. 20:37 20 minutes, 37 seconds Okay. And just a last one quickly on the district also uh I mean there have been uh constant media reports that there some events getting cancelled because of 20:46 20 minutes, 46 seconds inability of certain artists not coming to India because of the war. uh any sense as to like u u will the business 20:55 20 minutes, 55 seconds still continue to deliver strong numbers despite all this uh macro challenges on that business. 21:02 21 minutes, 2 seconds Yeah, I don't think this will impact the overall broad growth path of the business events is a is just just a part of the business and we have multiple 21:10 21 minutes, 10 seconds categories now. So uh so I don't think few concerts getting delayed or postponed or even cancelled will impact the outlook on the business. 21:19 21 minutes, 19 seconds Perfect. Thanks a lot for taking my question and all the best guys. Thank you. 21:25 21 minutes, 25 seconds Thank you. Next question is from the line of Ashwin Ma from Ambit. Please go ahead. 21:33 21 minutes, 33 seconds Yeah. Hi. Can you can you hear me? All right. Yeah. Hi. Go ahead. 21:38 21 minutes, 38 seconds Yeah. Hi. Uh thanks thanks for the opportunity. Uh one question. So uh if I look at your consolidated financials, uh 21:45 21 minutes, 45 seconds your advertising promotion cost in absolute terms was flat. uh sequentially. So any sense uh that you 21:52 21 minutes, 52 seconds can give in terms of what proportion of this goes to to blink it? Uh and the followup to that is philosophically how 22:01 22 minutes, 1 second are you thinking in terms of uh reacting to competition because uh news flow seems to suggest that one of your competition seems to be growing much 22:10 22 minutes, 10 seconds faster sequentially at least. So uh are you okay to let go of some market share near-term and still focus on 22:18 22 minutes, 18 seconds profitability or uh or you will possibly react to uh to to some of them given the guidance of 60% plus growth. 22:28 22 minutes, 28 seconds Hi Ashwan, this is Kunal here. So to your first question of consolidated uh ad promotions includes multiple things across our multiple businesses, right? So there is uh promotional spend. 22:39 22 minutes, 39 seconds So let's say on the food delivery side like Axan said we channelize some of our incremental revenue per order uh you 22:46 22 minutes, 46 seconds know to a certain cohort of value conscious customers that would sit there uh there are uh you know obviously 22:53 22 minutes, 53 seconds customer acquisition spends for our quick commerce business uh marketing spends for food delivery so it's a you 23:00 23 minutes know I think each business uh is also has its own nuances and dynamics so I don't think we can you know uh strip that apart and get into each of those. 23:10 23 minutes, 10 seconds uh I think broadly what the commentary we've given for each business kind of reflects uh our strategy for each business there 23:19 23 minutes, 19 seconds and yeah and I'll answer the question on uh uh growth Ashwan see I think to the 23:26 23 minutes, 26 seconds best of our knowledge uh we are uh growing as as fast as we can um in the market uh adearing to the principle that 23:35 23 minutes, 35 seconds the growth actually has to be meaningful and it has to be healthy uh for the business both in the short term and in the long term. Uh, of course, you can 23:42 23 minutes, 42 seconds always make the argument that, you know, we can grow a lot faster by um opting for unhealthy growth right now. We just 23:51 23 minutes, 51 seconds don't think that that is the right thing to do and that that growth will eventually turn into, you know, healthy 23:58 23 minutes, 58 seconds growth just by magic. Um, so as far as we know, uh, you know, this is the fastest that that we've been able to 24:06 24 minutes, 6 seconds grow this quarter. uh you know in a very in a way which still aderes to our core principles. 24:14 24 minutes, 14 seconds Sure. Thanks Arvindra and all the best. Thanks. 24:20 24 minutes, 20 seconds Thank you. Next question is from the line of Jagnanchu Gore from Bernstein. Please go ahead. 24:27 24 minutes, 27 seconds Uh hi, thank you for the opportunity. Um I have two questions. One is as a large part of our growth narrative from here 24:34 24 minutes, 34 seconds on depends in some sense on either growing the non sort of grocery assortment and going deeper into outside 24:44 24 minutes, 44 seconds of the metro cities. Uh two questions related to these one is there possible to give some quantitative 24:51 24 minutes, 51 seconds understanding of how some of the non-metro cities are doing in terms of size of business per store. I understand the profitability margin metric which 24:59 24 minutes, 59 seconds was in the in the letter but in terms of size either revenue or order per day what kind of ratio can we expect in 25:05 25 minutes, 5 seconds metro versus uh versus tier one or a tier two town I think that's question one and let me ask the second one so that if there is any interdependence uh 25:14 25 minutes, 14 seconds the second is we see that inventory days seem to have gone up uh uh over the last few quarters after the transition as well right to 1. 25:25 25 minutes, 25 seconds So uh what would be the driver for this and where would we feel comfortable not from a uh working capital employment but 25:33 25 minutes, 33 seconds just from a risk perspective uh what would be comforting for us? Yeah. 25:40 25 minutes, 40 seconds Uh so we don't uh we don't disclose the breakup uh intentionally uh for whatever our businesses in uh the larger cities versus emerging cities. 25:51 25 minutes, 51 seconds And uh on the second part uh I think before we give more color I don't think it is related the the uh inventory days 25:59 25 minutes, 59 seconds are not related to in any ways to the split uh that we have between tier tier one and tier 2 or tier three cities and Janu just on that inventory build 26:08 26 minutes, 8 seconds when you said last few quarters of course we're aware that last few quarters from Q 2 Q3 especially we saw 26:15 26 minutes, 15 seconds the shift to 1 P right uh and the share of 1 P also increased 26:22 26 minutes, 22 seconds uh during that time but Q3 to Q4 uh there hasn't been any meaningful increase apart from the increase 26:30 26 minutes, 30 seconds expected because of the growth in the scale of the business right uh that doesn't change the 90 days anyways so I think 90 days are fairly 26:38 26 minutes, 38 seconds uh steady and and we not seeing that increase unlike what you suggested okay cool uh just then maybe a followup 26:47 26 minutes, 47 seconds uh just one small point on the uh st if you look at the standalone business. Uh my understanding is that includes uh and 26:54 26 minutes, 54 seconds specifically looking at ad spends, it includes basically food delivery plus district ad spends. Is that the right right assumption? 27:03 27 minutes, 3 seconds It's not the entire district but a part of the going out business largely the dining out business. Yeah. 27:10 27 minutes, 10 seconds Okay. So even for dining out it's a small part. So uh that's our businesses are split across multiple entities. So generally 27:17 27 minutes, 17 seconds speaking, I think it's hard to reconcile our MIS that we the way we reported to our uh uh audited financials, you know, unless you have more data. 27:30 27 minutes, 30 seconds Got it. I was trying to reconcile your statement that you are seeing a low CAC on the quick commerce business and hence u trying to reconcile that with the MTU edition. 27:41 27 minutes, 41 seconds Yes, that's correct. So I think for the same marketing dollars, we are seeing more new customer edition, right? So, so that's how uh that that's what I meant 27:49 27 minutes, 49 seconds when I said the CAC uh for us is reducing. Fair. All right. Great. Thank you. 27:56 27 minutes, 56 seconds Thank you. Next question is from the line of Goravia from Morgan Stanley. Please go ahead. 28:02 28 minutes, 2 seconds Yeah. Hi, congratulations on good performance on profitability in quick commerce. Uh I have two questions. My first question is on uh your comments 28:10 28 minutes, 10 seconds around competition which probably hasn't changed much in the last couple of months and still you expect a 60% plus 28:18 28 minutes, 18 seconds caggr in the quick commerce business. So is it that you're not changing your stance and you still expect this healthy 28:25 28 minutes, 25 seconds growth to continue at 60%. And at what point in time you know you need to kind of relook at the stance on your uh 28:34 28 minutes, 34 seconds certain uh thresholds of or other things uh what is a northstar metric that you focus on whether it is MTC addition 28:42 28 minutes, 42 seconds number of order growth NOV growth etc to be a or market share to be able to understand that at what point in time you need to change your stance to react to the competition. 28:53 28 minutes, 53 seconds I think we keep reacting according to uh what we feel is right and it all depends on micro markets. So I don't think uh 29:00 29 minutes our stance is more around the principles that we have around building a healthy business and uh you know uh there are places where our MO is also lower there 29:09 29 minutes, 9 seconds are places where we also offer free delivery um and I think these are not undimensional calls for us and we keep taking them 29:18 29 minutes, 18 seconds I think we we look at uh you know customer retention and uh customer frequency on our own business right I 29:25 29 minutes, 25 seconds think as long as we don't see that being impact impacted in a meaningful way by what everyone else is doing. I I think 29:32 29 minutes, 32 seconds then you know the the choice to stick to the principles Albindra mentioned is still there right so so we haven't uh 29:40 29 minutes, 40 seconds you know over the last few months uh seen our customers turn away from from our platform too much right and hence I think at this point we don't see the 29:48 29 minutes, 48 seconds need to to react more than what we've already done got it my second question is on your 29:56 29 minutes, 56 seconds tier top eight cities uh you did give a very good data point on geographic coverage uh of 80 90% uh coverage in the 30:05 30 minutes, 5 seconds pin codes. Does it mean that now from here on incrementally growth will be less led by the customer addition in 30:14 30 minutes, 14 seconds these top eight cities and more by the wallet share and the average spend per customers and and hence the growth rates 30:21 30 minutes, 21 seconds when we when we look at the MTC edition it is going to be largely largely driven by the non-tropic cities. Thank you. 30:28 30 minutes, 28 seconds Yeah, partly true but I think even in these cities where we have high pin code coverage uh it doesn't mean that we have 30:35 30 minutes, 35 seconds like maxed out on potential customers uh in that neighborhood right so while assortment expansion will drive higher 30:43 30 minutes, 43 seconds wallet share for existing customers but I think equally or maybe even larger portion of growth will continue to be customer edition given the low 30:51 30 minutes, 51 seconds penetration that we have uh within the pin codes that we cover. Thank you all the best. 30:58 30 minutes, 58 seconds Thank you. 31:01 31 minutes, 1 second Thank you. Next question is from the line of Gimma Mishra from Kotak. Please go ahead. 31:09 31 minutes, 9 seconds Yeah, thanks for the opportunity. Uh, first question on blinket. U, how should we think about the discounting which is prevalent in the quick commerce market 31:17 31 minutes, 17 seconds today and how confident are you of maintaining your pricing discipline as well as a 60% growth CAGR in the business? 31:26 31 minutes, 26 seconds BMA we are very confident of maintaining our pricing discipline. Uh we're not sure what competition will do. Um I 31:33 31 minutes, 33 seconds think the uh it is very hard to estimate what is happening in the market frankly. 31:38 31 minutes, 38 seconds Um how much of the uh how much of the market uh is froth, how much of it is uh artificially inflated by discounts. Uh 31:47 31 minutes, 47 seconds it's very hard to actually tell. So very hard to comment on that. But you remain confident in that you'll be able you are 31:56 31 minutes, 56 seconds already retaining that customer who you think is the more profitable customer and sort of sits well within what blanket stands for. Is that the right understanding? 32:06 32 minutes, 6 seconds Yes. Got it. Second question was on district. 32:09 32 minutes, 9 seconds You are already present in different verticals pertaining to the broad going out category. What new categories are you looking to add within district and particularly within travel? 32:23 32 minutes, 23 seconds So GMA I think we no plans to add any more category to district than we already have and uh I don't think travel is a focus area for us at this point. 32:39 32 minutes, 39 seconds Got it. And last question maybe uh Hyper Pure reported a small margin in the quarter. You have however not included 32:46 32 minutes, 46 seconds this segment when you talk about your future profitability. How should we read this and should we assume that this business remains insignificant from an 32:54 32 minutes, 54 seconds overall you know profitability perspective? 32:57 32 minutes, 57 seconds Uh not really. I think uh uh I I don't know why you are saying that we haven't included this business when we talking 33:05 33 minutes, 5 seconds of I mean the overall billion dollar profit statement that we have made includes all the businesses that we are into today including hyper it will of 33:14 33 minutes, 14 seconds course uh it might be the smallest but it'll still be meaningful and relevant. Got it. Thank you so much. 33:22 33 minutes, 22 seconds Thank you. Next question is from the line of Rishi Jonjunwala from IFL. Please go ahead. 33:28 33 minutes, 28 seconds Yes. Thank you. Uh a couple of questions. Uh firstly, see if we look at our uh you know order growth in food 33:36 33 minutes, 36 seconds delivery as well as in QC. So in in in food order growth was 15% YI but uh the 33:43 33 minutes, 43 seconds active delivery partners on a monthly basis went up by 30%. In QC also the 33:49 33 minutes, 49 seconds order growth was slightly above 90% but um the rider growth was uh 120%. 33:57 33 minutes, 57 seconds uh while in QC I can still understand that you're expanding rapidly and probably you know adding a lot more uh 34:04 34 minutes, 4 seconds there but in food um you know what explains this gap given that you know effectively if I calculate ride in 34:14 34 minutes, 14 seconds number of orders per rider per month it has come down by 10 to 15% in both the businesses over the last one year 34:22 34 minutes, 22 seconds advance over here is the the changing nature of how much people work every Okay. Uh on these platforms uh so we're 34:29 34 minutes, 29 seconds seeing more and more part- timerrs uh also delivering and that actually increases the uh active partners but 34:36 34 minutes, 36 seconds reduces the number of orders they do per shift per day. 34:40 34 minutes, 40 seconds Understood. The second question is on food delivery right so we are close to that 20% mark from a growth perspective we are at 5 and a half% from a margin 34:48 34 minutes, 48 seconds perspective. We had taken a a midquarter hike in platform fee. probably you know next quarter it flows down completely uh 34:57 34 minutes, 57 seconds uh to the bottom line. So how do we you know think about um you know incremental operating leverage that you would get in 35:04 35 minutes, 4 seconds the business as well as some of these uh increase in monetization to flow through uh the food delivery P&L. Do you intend 35:12 35 minutes, 12 seconds to utilize that incrementally um in in some sort to increase growth and if yes how or otherwise do you 35:22 35 minutes, 22 seconds believe there is actually um there could potentially be upside to that uh you know NOV margin guidance that you have provided in the past? 35:31 35 minutes, 31 seconds Yeah. So I think this is uh I mean this has always been the case that we we are more leaning towards growth right so if 35:39 35 minutes, 39 seconds we can find ways of effectively reinvesting any incremental margins that we get in our business any business right I think we would do that uh you 35:48 35 minutes, 48 seconds know because the objective is to optimize for growth of absolute profit and not the profit margin percentage 35:56 35 minutes, 56 seconds right so that that's always been the principle and will it will remain that way I think what we are seeing now in the last two three quarters especially 36:02 36 minutes, 2 seconds in the food delivery business is uh a a good ROI on the on these investments for growth right that uh and that's a 36:10 36 minutes, 10 seconds function of like also like us uh us innovating on on how we look at these investments right and and what uh and 36:20 36 minutes, 20 seconds and how we implement so comes down to execution also and it's also a function of like market readiness consumer readiness and so on so at this point 36:28 36 minutes, 28 seconds therefore we are seeing uh that if you reinvest in growth we are getting outcomes and and that growth quality is good. Uh so we'll continue doing that 36:37 36 minutes, 37 seconds without uh worrying about what it does to the margin. uh I think netn net this should ensure that our absolute profit 36:44 36 minutes, 44 seconds continue to grow at the fastest pace possible the food delivery business right but in future again applying the same principle if that stops happening 36:51 36 minutes, 51 seconds right we could see some of this uh incre uh incremental revenue flowing down to profitability and that's also fine right 37:00 37 minutes so I think I just that's the sort of framework that we follow and outcome could be uh either percentage margin 37:07 37 minutes, 7 seconds increasing or growth going up both of them will Optimize for the absolute dollar a bit. 37:14 37 minutes, 14 seconds Understood. Thank you so much. All the best. 37:17 37 minutes, 17 seconds Thank you. Thank you. Ladies and gentlemen, in the interest of time, we will now take the last one to two participants. The next question is from the line of Vijay Jen from City Group. 37:26 37 minutes, 26 seconds Please go ahead. Yeah. Hi, thank you for the opportunity. 37:31 37 minutes, 31 seconds Uh my first question is so you know uh within that guidance of 60% plus CGR on 37:37 37 minutes, 37 seconds quick commerce um you know the top 20 cities that you call out would they 37:44 37 minutes, 44 seconds still be you know above 40% within that um any any kind of you know broad uh assessment of what that embeds for top 37:52 37 minutes, 52 seconds 20 cities that you could give would be helpful. That's my first question. Um my second question is um you know uh within 38:00 38 minutes QC in terms of you know the ad monetization I just want to get a handle on you know is in terms of the 38:07 38 minutes, 7 seconds monetization is it mostly uh you know driven by the SKUs that you stock and uh that you are able to you 38:15 38 minutes, 15 seconds know surface to the customers or you know the ad loads at checkout and u you know top of the funnel ads are 38:22 38 minutes, 22 seconds meaningful. That's the second thing I wanted to ask and u uh third if you could give more color on you know where 38:31 38 minutes, 31 seconds uh how you think about the whole uh supply chain automation you talked about it I think in 3Q and I just wanted to 38:38 38 minutes, 38 seconds get a sense of uh are we looking in the next two to three years at more of these automation capeex uh for your business and any sort of 38:46 38 minutes, 46 seconds guide you can give on u how you're thinking about capeex beyond the store additions that you would do uh those are my three questions. Thank you. 38:56 38 minutes, 56 seconds So, Vij, the first one we uh don't give that breakup uh and I think uh we we won't be able to give you that color. I 39:04 39 minutes, 4 seconds didn't really understand the second question. Uh I think if you So, I just wanted to understand the ads business, right? The ad monetization that you achieve. Uh my guess would be 39:13 39 minutes, 13 seconds the the biggest chunk of that is uh you know this uh the brands themselves advertising on you uh for stock that you 39:22 39 minutes, 22 seconds actually hold on the platform. uh uh but there will also be ads uh related to you know that you show on checkout or ads uh 39:30 39 minutes, 30 seconds which are more you know like the brand page that you have and I wanted to get a sense of uh you know what the composition of your ad revenues looks 39:39 39 minutes, 39 seconds like between these two three different kinds of categories. So uh non you know non-trade ads uh basically ads by brands 39:49 39 minutes, 49 seconds or platforms which don't sell on the blinket platform. That's insignificant for us. 39:54 39 minutes, 54 seconds Got it. Perfect. And the last question was on uh you know uh capeex and uh how much of you know what capeex you plan to 40:01 40 minutes, 1 second do the next two three years is uh related to you know automation that you might do. 40:08 40 minutes, 8 seconds I'm just trying to get a sense of whether automation, you know, all the automation that I think um you guys have shown in some videos as well. Um uh how 40:16 40 minutes, 16 seconds much of that is scalable and is that is that something that you're planning to do across all of your warehouses and so on. Yeah. So vitally keep testing for that. 40:25 40 minutes, 25 seconds I think like we are not we don't want to just pursue automation for the sake of it. I think uh the framework is that the capeex 40:34 40 minutes, 34 seconds should have ROC that that we can track and that is visible right so that's the fundamental principle but directionally 40:42 40 minutes, 42 seconds yes I think what we are seeing is that more and more uh I mean directionally we are seeing the automation increasing in both our warehouses uh in in all our all 40:50 40 minutes, 50 seconds our warehouses so we will see that happening over the next few years as well but how much of it is automated uh is a function of again the framework on 40:59 40 minutes, 59 seconds ROC right so It's all a function of the cost and the efficiency uplift we get because of automation. Okay. Thank you. Those are my question. 41:06 41 minutes, 6 seconds Thank you so much. Thank you. 41:10 41 minutes, 10 seconds Thank you. Last question is from the line of Sachin Salonar from Bank of America. Please go ahead. 41:17 41 minutes, 17 seconds Thank you for the opportunity and congrats on great set of numbers. First question is on competition. Just wanted to understand is competition also 41:24 41 minutes, 24 seconds intense in tier 2 tier three cities or is it that there are few operators and hence competition is reasonably lower out there. 41:32 41 minutes, 32 seconds I think uh competitive intensity is fairly high pretty much wherever everybody's reach I think a different kind of I mean different set of players in different markets right 41:40 41 minutes, 40 seconds but someone is aggressive somewhere at this point right so for us it's comparative everywhere got it uh in terms of dark store 41:49 41 minutes, 49 seconds additions when we think about it is the mix still 80% urban and 20% tier 2 tier three or you know that has changed over 41:56 41 minutes, 56 seconds a period of time that's changing suchin and I think uh I mean we not giving a specific guidance as we mentioned but uh increasingly I 42:04 42 minutes, 4 seconds think as we've also mentioned in the letter a large part of our growth will come from geographic diversification so we will see that uh mix change over time 42:13 42 minutes, 13 seconds and you know other what you mentioned in your letter is obviously assortment expansion so does that mean we are looking to upgrade some of the dark stores to bigger size dark stores now or 42:21 42 minutes, 21 seconds add more dark stores in the vicinity I think that means we are going to expand our assortment by whichever way we can 42:29 42 minutes, 29 seconds so for us it's like square foot space, right? So, uh size of the store is a function of lot of factors, availability, the specific neighborhood, 42:37 42 minutes, 37 seconds uh the uh urban infrastructure in that neighborhood. So, it's a very hyper local call. There is no sort of one uh single 42:46 42 minutes, 46 seconds sort of answer for this that applies to every every city and every locality. 42:51 42 minutes, 51 seconds Got it. Pretty clear. Next question is on uh AI on ads. uh you know we seeing multiple platforms globally actually now 42:58 42 minutes, 58 seconds seeing that the ceiling on ad revenue as a percentage of gov has now started to move up because AI does allow them to do 43:06 43 minutes, 6 seconds a lot more things and you know push ad per se from that point of view you guys clearly are doing a lot on AI so does that mean that you know at some point in 43:14 43 minutes, 14 seconds future also what we expecting as a sort of a cap on ad as a percentage of GMV that might move up and hence there's 43:21 43 minutes, 21 seconds room for your steady state margins also to move up in both food as well as with com generally we don't operate like with a 43:29 43 minutes, 29 seconds cap in in in a mind right I mean we don't know what that cap is like honestly right so so I think we'll respond to the realities of the 43:38 43 minutes, 38 seconds situation around us in the business right and if if that means it we have an opportunity to to have higher ad income in our business so be it right and same 43:46 43 minutes, 46 seconds framework then if we have that we have more margins can we invest in growth can that growth drive more profit like so that's the mental model which is fairly 43:53 43 minutes, 53 seconds fundamental and simple But uh we we don't operate with uh a set of sort of metrics with some ceilings or 44:02 44 minutes, 2 seconds target or goals in mind. So I don't have like any any other color to share on this. 44:08 44 minutes, 8 seconds Got it. And a when we talk about quickcommerce margins at steady state being at 5 to 6%. Is there an implied assumption in terms of you know how much 44:16 44 minutes, 16 seconds ad uh out here is in terms of that 5 to 6%. No, no. As I said, I mean like we don't know. We're discovering that like we haven't I mean like quickmers is a 44:25 44 minutes, 25 seconds much younger business than food delivery. It's already doing more in terms of ad as a percentage of NOV, right? So, so we don't uh I mean we 44:34 44 minutes, 34 seconds don't necessarily don't have a number in mind here on where does it land and finally go to. 44:40 44 minutes, 40 seconds Got it. And last question is if there is any sensitivity on higher fuel prices to demand on food. Historically have we 44:47 44 minutes, 47 seconds seen anything when fuel prices have increased there has been an impact in demand. 44:53 44 minutes, 53 seconds So it depends on the quantum. Uh generally uh you know increase in fuel prices will lead to higher cost of 45:00 45 minutes delivery. The last mile cost goes up right. So now what percentage of that we decide to pass on to consumers uh is 45:08 45 minutes, 8 seconds something that we'll decide when the time comes right. So it all depends on that quantum in the past if you see going by the last 12 18 months 45:16 45 minutes, 16 seconds experiences and examples like the GST hike happened uh you know we were fairly easily able to pass it on to consumers 45:24 45 minutes, 24 seconds without too much impact on demand. So uh unless it's a drastic increase, I don't expect uh fuel price increase to have a 45:32 45 minutes, 32 seconds meaningful impact on margins on our business. Got it. All the best. Thanks. Thank you. 45:39 45 minutes, 39 seconds Thank you ladies and gentlemen. We will now conclude this conference call. Thank you for joining us and you may now disconnect your lines.