ETERNAL LIMITED (ETERNAL) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, a very good evening, and welcome to Eternal Limited's Q3 F526 earnings conference call. From Eternal's management team, we have with us today Akshan Goyal, Alvinda Singh Dinsa, and Kunal Saroop. Before we begin, a few quick announcements for the attendees. Anything said on this call, which reflects outlook for the future, or which could be construed as a forward-looking statement, may involve risks and uncertainties. Such statements or comments are not guarantees of future performance, and actual results may differ from those statements. 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 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.

We will wait for a minute while the question queue assembles. First question is from the line of Manish Hadoukia from Goldman Sachs. Please go ahead.

Hi, good evening. Thank you so much for taking my questions and congratulations on a good quarter. So my first question is on the quick commerce margins or losses and congratulations on the break even there. Now, in this quarter, if you look at numbers, your gross margin didn't really expand. Stole throughput was down about 6% QOQ. But despite that, your contribution margin expanded 90 basis points, a bid expanded about 130 basis points. And all of this is why you say that the competition is irrational. Now, if you assume competition remains irrational, which is what you're assuming, then why should directionally margins not continue to improve at the same pace as what you did in this quarter? Would love to, you know, get your thoughts on that. That's my first question, please.

Yeah, hi, Manish, Akshant here. So I think, yeah, I mean, like, it's very hard to predict the trajectory of margin, I think, which is what we've also mentioned in one of the questions in the letter in the near term, right? So competition is not, I mean, the competition intensity, even if it's high, is not steady always, right? So last quarter, we did see first of the quarter being actually on a last conference call, we mentioned that the competitive intensity is now easing off and then it changed. So, I think the margins is a function of various things. Competitive intensity is one of it. And even that, within a quarter or even in a longer period, you know, the various variables, geography specific, and so on. And so, yes, I think directionally we say that margin should expand, but we're not able to confidently say that the pace of margin expansion will be same as what happened in the last quarter because the comparative intensity was high in the last quarter and therefore going forward should also be the same. So it's, I think, a multivariable problem with not a linear correlation with just one variable.

No, I appreciate that, Akshan. Thank you. So a follow-on question then on competition. One, if you can maybe clarify, quarter-on-quarter, your store throughput was, I think, down about 6% or 7%. What explains that? And maybe a related question. So you're saying, in the previous quarter, you mentioned that you want to grow at 100% YOY or expect to grow at 100% YOY at least for the next one to two years. Now you're saying that that 100% YOY growth is contingent upon competition not staying irrational. So I just wanted to tie up that guidance that you're saying that if competition is not irrational, it's only when you'll open 3,500 to 4,000 stores, and only then you'll achieve 100% YOY and overgrowth. Is that understanding correct? And my first question was just on store throughput.

Yeah, broadly, that is correct. See, the way the competitive intensity affects us is, you know, in which form it comes, right? So last quarter, we saw a lot of competitive intensity get amped up because a lot of competitors went to zero, like low MOVs and zero delivery fees. But we're also seeing a lot of discounting happen in the market. So therefore, it becomes a lot more complex for us to also be able to say that, you know, which way the things will move and how we will have to respond. But broadly, what you've said is broadly correct.

And on store throughput, Manish, I think it's a function of the fact that our assortment is now expanding. And I think it's possible, therefore, that there are quarters when some of the store expansion, the driver of that is assortment expansion, which is not as fast moving as some of the main head SKUs. So I think over long term, we don't see that as a concern. And I think the fact that assortment is expanding is also reflecting in our margins, which were better last quarter, despite the throughput being lower, as you mentioned.

Got it. And just my last question on this topic. So your growth is good. You said like for like 130% YOY, you're expanding margins. So where is competition showing up? I mean, as of today, it's not really impacting you. Is that the way to read it? And what needs to change for competition to start impacting your numbers?

Well, so we're not saying that, Manish. I think, I mean, there's always a way to look at things. And one can argue that in absence of a national competition that we are pointing out, things would have been much better than what they are today. Right? So that's also one perspective. So the competition is impacting us, but in terms of our outcomes and numbers, but it may or may not impact the decisions that we take, you know, in a particular quarter, right? So, for example, in the last quarter, we didn't see these freebies impacting our market share too much, and hence, we sort of sustained our pricing. But as you might have seen last week, we did drop our delivery charges in some markets because we saw some impact, right? So, overall, I think there's definitely an impact of competition, and it impacts our margins, it impacts our top-line growth, it impacts our store expansion plans, and various other things.

All right. Just last question before I jump back in the queue. You've maintained your 3 billion NOV guidance for going out in F30, which would imply north of 30% CAGR over the next four years. Last quarter, of course, was about 20% growth. So one, why is the growth as low as it is right now? And two, what explains that meaningful exploration that is being built into your guidance?

Yeah, so I think a large part of our growth here in this business is we are expecting going forward is going to be from market share growth, right? I think there are subsegments within district business like events and movies where we are a significantly smaller market player even now compared to our competitors, right? So for us to deliver 30% CAGR over the next three, four years, it doesn't necessarily mean that the industry has to grow by that much. I think a lot of it can also come from market share gains, and that is what we are building into our plans right now.

Very helpful.

Thanks a lot. I'll jump back in the queue. Thank you. Next question is from the line of Ankur Rudra from JP Morgan. Please go ahead.

Hey, thank you. And again, nice to see a quick break even here. Maybe to start with, could you highlight whether the slower growth in orders this time, It seems to have slowed a bit more than your headline revenues in the quick commerce business, and it again has not been impacted by GST. Is that a reflection of the more aggressive stance from a competitive perspective? Did you lose some share to peers?

Yes, some of it is an impact of that, Ankur.

Got it. And going forward, do you think this will normalize?

We have no idea. It depends on how the overall market behaves.

Got it. Maybe just another follow-up on the previous question. Your addition has slowed down this time. It should imply a better store vintage, and the older store should ideally have better NOV per store. I think you made a comment about that. I'm just curious to see why it's not coming up, why the NOV or throughput per store per day is not expanding if we see a better vintage.

Yeah, so Ankur, that's again a function. As I mentioned that, you know, if a lot of our store addition last, not just last quarter, but last two, three quarters has been towards assortment expansion. And as we now further expand the assortment, the turnover of this, the long tail is not that high as what we started the business with. So there is always that negative impact of a sort of an expansion on throughput that we will continue seeing in the business. And I think in this quarter, that's resulted in a slight dip. I don't think we should read too much into that at this point. You know, we should bounce back and NOV per day per store, which we believe will continue to grow.

Also, part of the impact was on account of the GST change. I think that if in absence of that, you know, that 3% impact would have been.

Yeah, I saw that. I was hoping it'll expand, given the, you know, it slowed down a bit, but I understand the answer. Just a couple of points on the cash flows, you know, I can see that CapEx has gone up a bit this time, despite, you know, fewer stores added versus last quarter, and also your working capital days seem to be expanding. If you can comment on those two factors, please.

Yeah, so, Ankur, as you mentioned in the letter, I think what we are, our framework for thinking about CapEx and networking capital is ROC, right? And it's a young business. We don't have a playbook for, you know, how much NWC is going to give us, what kind of ROC, etc. So we are being open-minded and first principles on this. In the past, we've shared some assumptions on what CapEx per store could be going forward, and what our sort of networking capital is in the business could be. Broadly, I think we are hovering around the same range right now. But, you know, especially on CapEx, I think we think that it will go up on a per store basis going forward, because there's a lot of automation opportunity here, which will increase productivity. So, even though we might see CapEx per store going up over the next few quarters, we don't expect networking capital to be beyond that 18 days that we had shared earlier. So, that should remain within the range. And hence, as a consequence of that, the ROC outcomes should still be north of 40%. I think that's what we are solving for.

Understood. Thank you, Investor.

Thank you. Thank you. Next question is from the line of Sapnal Port2K from JM Financial. Please go ahead.

Hi, thanks for the opportunity and congrats on breaking even in the quick commerce business. My first question is with respect to the contribution margin expansion that happened in Blinkit. So 90 basis points improvement, this was despite 20 basis points of take rates coming off. Where exactly, if you can pinpoint, did you see a meaningful improvement or the play out within the contribution expenses, between the take rate to contribution margin expenses?

I think something that's mostly to do with the mix change is this impact of seasonality also over there. And then some of the other factors also impact like what product mix we end up selling in the quarter.

And the cost efficiencies, I think most of the benefits, as you see, are on the cost side, below gross profit. So I think there's no one particular factor. I think it's largely operating leverage, which is resulting in lower costs and some sort of higher productivity in the warehouses that's resulting in the increase in margins.

Got it. And going ahead, given that you also mentioned that you have cut down your delivery fees in certain markets, so that, in my opinion, will put some pressure on your take rates, right? So how much contribution margin expansion will realistically be possible for us to sustain, let's say, in the next quarter or so?

So yeah, for next quarter, or even two, we don't want to comment anything. And I think I hope you'll appreciate that. And we've mentioned that in the letter, try to explain what are the various reasons why this might be a little volatile in the short term. So very hard to talk about whether the margins will expand at all, or if they do, by how much in the next quarter. Okay. And just to add, I think longer term, in our letter, we have mentioned that our confidence on margins going to 5% to 6% of NOV remains high. And we have shared data on a couple of cities in our business where we are already at 5% registered a bit of margin, right? So the way we think about margins is therefore, you know, long term, we have extremely high confidence on the business model delivering the margins that we need to get to the ROC that I mentioned. But in the short term, we want to take the right decisions for the business. And that could mean taking a margin hit if we have to do that. And we are open about that. So we are not saying that that's going to happen next quarter. These decisions are going to be tactical and taken real time. And hence, a lot of it depends on how the market shapes up over the next three, six months. And that's why the unpredictability on margin from here on.

Got it. And can you just clarify, because there have been a few changes in the labor code this time around, and how much of those costs are already baked in your margins today? And coming from the two impacts, essentially, that I want to understand about. One is the impact because of the gig worker cost going up towards their social security benefits. And secondly, because of the changes on the gratuity side for some of the fixed-term contract labor. So if any of that is already in the margin or going ahead, we will have to face that challenge.

So, as we have mentioned in question 11, we don't think the new labor codes impact our long-term margin guidance. That doesn't change. As far as any potential impact on account of code on Social Security is concerned, we will get to know that once the rules are operationalized and notified. Right. And from what we know today, we think the business will either be able to absorb that cost or we'll pass it on to customers. And on your second part on gratitude and leave engagement, our assessment is right now that there's no impact on our business on account of that. But again, there are a few outstanding questions there that will get more clarity over the next few days. And if there is, then the next quarter will reflect that. But I don't expect that to be meaningful at all.

Got it. And just the last one on the going outside. I mean, our previous thought process was that the losses in that business will be around 60, 70 crores, maybe quarterly wise. There has been a sudden jump in this particular quarter. And against that, we didn't have that kind of a growth as well, 20% YY. Is there any scale up in investments that you had done and that is going to sustain? How should we look at that? Or was there a bunch of ups and investments this quarter, sir?

Yeah, I think it's more the latter. I think we decided to launch District Pass as a membership program, which we initially did not plan for in this quarter. And a large part of the increase in losses is on account of rolling that out. And I think that will not impact the top line numbers in this quarter, given the effect we'll be compounding over the next few months. But we think it's the right step now. And I think this is going to drive multi-category usage on the app. So I think we'll keep evaluating, you know, whether we need to continue this investment or not. But irrespective of that, as we mentioned in question 13, we expect now the losses to come down sequentially from here. What's break even in the next four to six quarters?

Good introduction. Very clear. Thanks a lot for taking my questions and all the best.

Thank you. Thank you. Next question is from the line of Garima Mishra from Quotac Equities. Please go ahead.

Thank you so much for the opportunity. First, if I refer back to your second quarter letter, you had mentioned that for the Blinkit business, GST cuts bring down vasted pricing by 3%, and this should help in higher demand. Did this play out in the manner you had envisaged in 3Q?

Hi, Garima. Some of it did, but there were also supply challenges because of the transition. So, I think it will become more clear over the next few quarters. It was not a resounding yes this quarter.

All right. Thanks for that. And Albinder, congrats to you on your new role of group CEO. So, do you continue to lead the Blinkit business or should we expect some internal leadership changes?

No, Garma, as we mentioned in the letter, we continue to operate like we are operating. I think still, as a team, Akshand, Dippy, and I will continue to do whatever we were doing, including me leading the Blinkit business. So, operationally, nothing changes for us.

All right. Thank you and wish you the best.

Thank you. Next question is from the line of Borob Rateria from Morgan Stanley. Please go ahead.

Hi, congrats on stellar performance this quarter. My first question is on your comment around 100% plus growth, which would be possible with 3,500 plus stores, which was probably earlier possible with 3,000 stores. Does it mean that incrementally, whatever stores that you are likely to add will carry the lower throughput than what you were expecting earlier? And is it because the competition has been aggressive in rolling out their own stores and hence the penetration of the number of stores has increased substantially and which brings down the throughput for you?

Hi, Gaurav. No, I think so. I think we never mentioned that the 100% growth from here on will happen with just 3,000 stores. We don't think that is likely, although possible. So, you know, for that to happen, we will need to open more stores, which is what we have mentioned here.

Okay, okay. My second question is on your competitive intensity. I guess you did allude to some tactical interventions that you may have done during the quarter. Is it fair to say that if competition remains where it is right now, whatever interventions that you are doing is sufficient for you to hold back to your market share and deliver whatever profitability you have? There will be need for more interventions if the competition remains at the current levels.

I think competitive intensity also tends to go up over time because the kind of competitive interventions that we are seeing, they usually lead to lower ROI as you keep doing more and more of them. So we will have to respond to a fairly volatile environment. I don't think we can just stay at an intervention and then hope that the competition also stays at the same thing. I think people will change. They will be more competitive and we'll have to also respond to that.

All right. My last question is on how to look at the breakeven on a cash flow basis in a quick commerce at the steady state margin that you are talking about on a quick commerce business. What would be that converting into from a free cash flow margin perspective? Thank you.

I think we've also laid out our view on how we think about return on capital here. And I think ROC of 40% plus is how we think about.

I think his question is that what will, what does that mean for free cash flow margins, right? Free cash flow over revenue?

Yes, yes.

Yeah, we haven't looked at that yet, honestly. So, okay.

Thank you.

Thank you. Next question is from the line of Gaurav Malhotra from Axis Securities. Please go ahead.

Yeah. Hi. Thanks. Thanks for the opportunity. Congrats on a good set of numbers. Just a couple of questions. You know, in the shareholder letter, we mentioned that 90% you guys have shifted to inventory. So the remaining 10%, which you said you will not shift, what is the assortment there? Is it like electronics, lower moving goods, higher ESP items? You know, what is the assortment of that 10%?

Gaurav, some of that is SKUs that we do want to keep on a marketplace model for different reasons, some of which are also related to they might be slower moving. And in some cases, there is a more vibrant seller ecosystem for these SKUs, which we think they do a better job of managing inventory and managing the back end, and we would be able to do that. So that's probably the kind of STUs that contribute to that number.

Got it, got it. And just on food delivery, you did take down the delivery charges, and we are seeing some, obviously, growth coming and picking up. But from here, do we expect growth to further accelerate? Or, you know, this is this, it sort of will remain in this kind of ballpark?

So on the growth, again, we mentioned, I think in response to question seven, that long term, I think growth opportunity is pretty high, given that some of our large cities are still growing 50 to 100% year on year. But sorry, I misunderstood your question was on food, right? Right?

Yeah, it was on food. It was on food.

Yeah, so as of now, as we mentioned that, you know, we expect the growth, year-on-year growth to continue slowly trending up towards 20% is what our current sense on the market is.

Got it. Okay. Thank you.

Thank you. Next question is from the line of Sajjan Salgaunkar from Bank of America. Please go ahead.

Thanks for the opportunity and Congress on a great set of numbers. First question is the move towards your inventory model. You guys said in the shareholder data, half of the one percentage point accretion has already happened. Should we expect the remaining half point to come in the next three to six months? And when you think about it, could the benefit be more than one percentage point out here?

Yeah, Sachin. So yeah, I think the full benefit should accrue more like in six to nine months. And yeah, we don't think the benefit will be more than one percent that we mentioned.

Got it. Second question is, any broad sense in terms of the store additions, what are happening in tier two, tier three city? Is the economics similar in top tier cities in terms of AOVs, OPDs, and hence should margins be similar out here?

Sachin, we're not providing any sort of breakup on to where we are opening stores, but the contribution, at the contribution level, the economics for us are fairly similar, even though the headline numbers might be different depending on tier one or tier two.

Got it. And I'll be, my question was more on the long-term steady state margins. So, this should also be 5 to 6% of NOV, right, in tier two, tier three cities? Correct. Got it. And every quarter you guys surprises positively in terms of looking to add more stores. When we take a four-year, five-year view, how big could this entire QuickCom or DarkStore stores be for the industry? Is there room for continued growth? Will the industry number be as high as around 10,000? Would love to get your big picture thoughts on this one.

Sachin, we are also finding out the depth of the market as we go along and we open more use cases. Customers also indicate how they want to use the platforms. So right now, we have a lot of vectors of growth, whether it is geographic or assortment, penetration, customer use cases, which are also coming up. So we are also finding out as we go along. So, you know, whenever we know better, we will sort of keep guiding to what we think. Right now, we think that in a rational market, there should be headroom for us to add a significantly higher number of stores in the near future.

Got it. And from a mixed perspective, right now where things stand, is it 70-30 mixed where 70% of stores are still in top tier cities and 30% in tier two, tier three, or could that ratio change?

I don't think they're providing this pickup session. Okay.

And my last question is generally trying to understand in, for example, a place like Bangalore, where every platform focusing on quick commerce is aggressive, which perhaps not be the case right now on a pan-India basis. How are directional trends for market share and contribution margin for you guys? Are you maintaining that share? Are you increasing share? Or is there a bit of an impact out there? Just broad direction.

So, I think from what the information we have, in most of the, you know, tier one markets, which is the metros, we have largely maintained our share of NOV. And we know that there is now there is competition in almost all of the cities. So, that is the best information we have.

Got it. All the best for future. Thank you.

Thank you. Thank you. Next question is from the line of Dignanshu Gaur from Bernstein. Please go ahead.

Hi, congratulations to Albinder again on the position. I had one question on just understanding the growth that you have seen in MTUs, especially on a dark store, per store basis, right? Our ad spends haven't for QC, when I look at the gross versus console versus standalone numbers, we don't really have seemed to have spent a lot more on ad despite the competition. So, we seem to be getting a lot more organic users. What do you think is attributable to this on a possible basis, continuing to get more users and not just AOEs? It's more related to assortment expansion. But then that should ideally then translate into, and that's the second question, into higher frequency of orders per customer, right? But that seems to have gone down. So is there a replacement happening? So that's the circle I wasn't able to square, frankly.

No, I think that's not as linear relationship as you think. If customers are coming to us through categories, which are expansion categories, then the frequency node doesn't necessarily go up because frequency driver categories are not the ones that might be entering through.

Okay. So, they are coming for expansion, but not necessarily doing the core transactions yet on this platform.

So, the trajectory might be different for as we expand this often more.

Understood. Great. Okay. And just a second follow-up on one of the questions I think Garima asked regarding leadership. So, does the Blinkit plus food and other going out or the entire leadership below the three of you remains as it is and there is no change? Is that the right way to think about it, at least for now? Okay, great. All right. Yeah, that's it for me. Thank you and congratulations.

Thank you. Next question is from the line of Abhishek Banerjee from ICICI Securities. Please go ahead.

Hey, hi. Congratulations on a great set of numbers. Just a couple of questions from my side. So, in the letter, you mentioned that CAPEX per store will increase henceforth. Why is that? Are we also moving to a Megapod structure?

Mubishak, it tends to be chunky, and we make a lot of investment in the warehousing infrastructure as well, especially as we expand deeper and deeper into the country. So that would explain the increase in CapEx per store. Also, we are investing a lot more in automation now.

And also, there is some increase in per store square foot size, as you mentioned, but it may not be similar to what other competitors are doing, but in general, our store size is going up every quarter.

So, is that for more assortment or any other reason?

Yes. I mean, for us, it's a function of availability of real estate. It's a function of how we want the store design to be. And because of that, I think there's a trend which is taking the store size up. So, Capex per square feet of space addition is not going to go up as much as Capex per store would.

Now, for Bistro, you mentioned that you're seeing some early signs of a product market fit. Can you please grab a little bit on that? I mean, what kind of scale up? Can we realistically, do you think?

Yeah, so, Abhishev, I think product market fit for us when we say that. We mean that, one, I think on customer side, there is genuine value being created for which they come back to the platform and transact. And then equally, from an economic standpoint, you know, we start feeling and getting more comfort on this business being able to make money, Especially given the AOVs are much lower here than what we see in the food delivery business. So these are the two elements of product market fit. The one on the demand side, I think we were anyways fairly confident. We knew that a few months ago when we opened the first few stores that customers are not coming here just for cheap food, but we are solving sort of an unmet customer demand here of quick snacky food, which is higher quality. At the right price point. So I think on that we had conviction early. But I think as we continue to build the business, we are building more conviction on economics as well. And hence, you know, at this point, our plan is to continue investing in this business in a sort of cautious way. And at some point, you know, like Blinkit, if we get extremely, if it becomes extremely clear that this is a profit making business and margin visibility is high, Then we may accelerate that expansion as well, right? So, we'll keep all of you posted on this every quarter.

So, for you, this is, you know, convenience plus value, both. I mean, just trying to compare with toying that CVS amount.

Not just convenience and value, I think it's also assortment menu, right? So, I think it's, there's a cuisine gap in the market which I think Bistro fills. And that is also why we don't see this business cannibalizing the Zomato business, right, wherever we have these stores.

That's true. And one last question from my side is, you know, in Dipinder's letter, it's mentioned that it's an restriction. This would come back to the employee pool. Now, what kind of an expansion would the use of pool, you know, then have? And how do you kind of think you were set for, I mean, for how much of a time period do you think you do not need to do more grants?

No, so I think, see, the way it works is we have a ESOP pool, which has a large number of shares today. I think roughly about, I need to check the number, but I think it's north of 20 crore shares. So, so his ESOPs will, will perhaps expand that pool by another 3.3 crore shares. Right. And the grant from this pool is a function of, you know, the, the board allocating ESOPs to different employees basis their performance, etc. Right. So grant is therefore, the grants are not going to go up just because the pool size went up. But because the pool size went up, you know, we may not need to dilute or ESOPs again for slightly longer than what we would have otherwise done. I think that's what we're trying to say here.

And is there any visibility on, you know, how much I'm going to do that at an ESOP pool?

Hard to say. I think at least we don't think we need any dilution in the near future at this point.

Okay. Thank you. Thank you.

Next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.

Hello. Yeah, thanks. You mentioned that this quarter you had 211 net store addition. Did you close any stores during the quarter?

Yeah, Kunal, just regular closures that happen for different reasons. So that is net store addition.

Okay. So, how higher will the gross number be versus the net number? Because that could also explain the CAPEX. Closure rate is very low. Very low. Okay. Okay. Okay. And there has been rapid expansion over the last few quarters. Do you see a need to review some of the stores? And similarly, there are cities, which, I mean, smaller cities, do you think some of them you might need to exit or it all looks good? It looks good. Okay. Second is, in terms of competition, is it largely between the three quick commerce players, or is it the e-com players, which have also expanded physical retailers, such as Geomart, also are talking about almost 800 dark stores and 1.6 million daily orders. So are you seeing any impact of these players, at least in the tier to tier three cities?

See, I think for us, competition is everybody who's trying to gain a market share of the, you know, the online buying pie. So, I think everybody's included.

But is there an increase in competition with the other three players also now getting more aggressive?

Yeah, I think generally the competition across the board has gone up.

Okay, fine. Lastly, in Blinkit, how much do cities beyond the top eight cities contribute? And how is the experience beyond the top cities? How many cities do you see a potential in?

We are not disclosing that, Kunal. I've mentioned that before also on the call.

Okay, okay, okay. Okay, that's it for me. Thank you.

Thank you.

Thank you. Next question is from the line of Nikhil Chaudhary from Noama. Please go ahead.

Yeah, thanks for the opportunity and congratulations on achieving break-even in Blinkit and Hyperpure. So first question is on 100% growth part. Last quarter, you have mentioned that you can deliver 100% YY growth for next two years. And if the opportunity size is so large, which we believe highly should be, then why short term change in competitive intensity can derail it, especially when you guys have already achieved break-even, you are talking about investing on market share gain, then what is stopping us from achieving this 100% growth? What has changed basically in one quarter?

Nikhil, our viewpoint on this is that there is the competitive intensity is also depending on the kind of competition you see. Currently, we feel that we are the only ones who are meaningfully contributing to increasing the market size, whereas the competitive intensity is mostly showing up and taking share away. And that is why you will see that pressure on growth. Usually, you will see much faster market growth, and then all the players are also gaining shares, but we are not seeing that kind of competition.

Got it. Thank you. Second, is the behavior remain consistent across the player, or is it more limited to incumbent? So, what I meant to say is, is new players like Amazon, Flipkart, and Geomart is also resorting to this kind of competition now, or is it more limited to incumbent?

We wouldn't want to comment on this question. I think you should find out and talk to others. Got it.

The last one on food delivery, we saw some acceleration this time, and also we are hearing positive commentary from consumer and consumption-driven companies in India. Is it fair to say you are more comfortable in reaching, let's say, 20% growth in FI 27, or maybe in two to three quarters?

So, very hard to say, Nikhil. I think these things keep changing for reasons which are beyond our control. So, I think we don't want to venture and take a guess here on how this moves. I think our business responds to growth and demand, and it's an asset-light model. So, if the demand expands, you know, unlike Blinkit, we don't need to build infrastructure to service it, right? So whatever is the pace of growth of consumer demand in the country, I think the business, our job is to make sure that we're able to cater to it. And that largely, our job there is to make sure that delivery partner supply matches the growth and demand, and restaurants are able to respond to that in terms of capacity, right? So, yeah, I think we just stick to our job and, you know, we don't want to take a guess on how this will grow from here in terms of growth rates.

Got it. This last one on the leadership transition, I think while you have clarified that currently everyone is doing what they were doing, but is it fair to say medium to long term, ultimately the goal is to transition more responsibility to Albinder and Dipinder maybe taking more executive role?

That's not the plan, Nikhil. I think Dipinder, as his letter mentions, he's going to continue to be involved in the way he was in the past. And I think there's a lot to be built at eternal right now. Most of our businesses are young, including food delivery. So I think we have a long runway ahead. And at this point, we're all committed to continue building it. Got it. Very helpful. Thanks a lot. And good luck for coming, Peter.

Thank you.

Thank you. Ladies and gentlemen, in the interest of time, we will now take the last one to two questions. The next question is from the line of Vijay Jain from Citigroup. Please go ahead.

Yeah, hi. Thanks for the opportunity. And congratulations, Alvendra, on the elevation to the CEO role and to the team for the break-even. My first question, so you said earlier that store sizes in general continue to go up every quarter. I'm wondering, as you identify in mature cities, are store sizes going up there as well? And related question to that, when you say automation in stores, could you talk a little bit about which, you know, where the automation will come in the stores? That's my first question.

Hey, Vijay, on the first one, yes, there are store sizes going up across the board. And on automation, actually, most of our automation is more related to our overall supply chain, so it's not just the stores.

Okay, got it. The second question I had was, you know, you mentioned earlier, you talked about, you know, assortment changes as, you know, as business grows and matures. In terms of, you know, the metrics that you track, is gross profits per square feet per day? I know you've mentioned in the past, it's still the not-star and do you care about, you know, maximizing order throughput per dark store per day at all? I'm just trying to, you know, get a sense on this because there are certain conversations that tend to focus too much on orders per dark store per day.

Vijay, we don't really have those kind of targets, whether it is orders per day or, you know, sales per square foot. I think our plan is to provide customers a better experience, whatever allows us to do it, and is good for the overall economics of the business. That's the direction that we end up going in.

Got it. Thank you so much. Those were my questions.

Thank you, Vijay.

Thank you. We will now conclude this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.