Ladies and gentlemen, a very good evening and welcome to Eternal Limited's Q1 FY26 earnings conference call. From Eternal's management team, we have with us today Akshant Goyal, Chief Financial Officer; Albindar Singh Dhindsah, Founder and CEO of Blinkit; and Kunal Swarup, Head of Corporate Development. 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. The first question is from the line of Ankur Rudra from JP Morgan. Please go ahead.
Thank you. You know, nice set of numbers overall. Just starting with quick commerce, pleased to see very strong growth there. Is it possible to give us a sense of how same store sales growth compares with growth from new stores, given that we'll probably, you know, see store additions potentially, you know, begin to slow down a bit more? Also on the quick commerce side, if you can highlight, you know, how, you know, if you think, I think you did make a mention about competition, but if you think competition is able to raise capital, then if your strategy will change in the short term in any way. Thanks.
Good result, Binder. Same store sales growth is not really a metric that we track a lot internally because the structure of our polygons and the catchment area that a store serves, that changes quite dynamically. It is harder for us to just sort of compare same store sales growth. When we look at existing polygon versus new polygons that we open, most of the current growth has come from existing polygons. Even in this quarter, when we opened a lot more cities, less than 5% of the overall growth actually came from the expansion. Areas that we were not serving earlier.
Just to add, we've also mentioned in the letter that like a city like Delhi, which I think from a geographical coverage standpoint is fairly well covered, we've seen a growth of 70% year on year in this quarter. As Albindar said, while same store growth may not be that relevant in our business, at least that data point was to showcase that even the relatively more mature markets are growing reasonably well.
Thank you. Is it possible to give us some color then in terms of a city like Delhi as an example? How much of the growth is coming from category expansion? What's the scope there over the next, you know, few years?
Yeah, that is not something that I think, you know, we want to necessarily talk about in a lot more detail because we do not give a category breakup.
Any color you can share overall?
I think, you know, the growth is fairly, you know, for us. Across all categories, there has been, you know, pretty secular growth. I think that's the only thing that we would like to share.
Okay. My follow-up on quick commerce was on the competition. You mentioned this in the letter as well. Do you think if competitive intensity rises, then your strategy will change in the short term versus what you pointed out?
Yeah, Ankur, I think as we mentioned in the letter, I think we'll have to react to the circumstances. I think we've been fairly clear on this one now and in the past that we'll respond to what the market is and we'll do the right thing. I think making sure that we maintain our leadership position is important for us and making sure that we give the best service to the customers is important for us. I think we'll have to play by the ear on that one.
Okay, thank you. Just a few questions on food delivery. One, you know, very good to see MTC growth coming back after three quarters of sort of flattish behavior here. If you can talk about the key initiatives which may have helped this right now. Do you think you're at a point where the momentum of at least increasing MTCs can stay? Finally, any particular changes in the way you'll run this business under the new leadership?
MTC growth is fairly, I think, in sync with the overall NOV growth, right? If you look at it on either on year basis, right? I think quarter- on- quarter, yes, it can appear to be lumpy, but if you look at it more longer term, I do not think there is any divergent trend there. We expect that MTC growth to continue along with NOV growth. I mean, AOV growth, which will, which should continue driving the growth of the overall business going forward like it has in the past.
Any changes in strategy or the way you run the business under new leadership?
Yeah, sure. I mean, there will be changes, but nothing that we want to highlight or talk about here.
Okay. Just one last question on overall business headwinds. Do you think potentially with GLP-1 drugs becoming generic in India, there could be a risk to food consumption and especially food delivery of your business beyond this? Any thoughts you may have had on that side?
No comment on it. I mean, still a new paradigm. And so far, I do not think we have seen GLP-1 impact food delivery in any other country. But as I said, it is fairly nascent. You know, theoretically, it can go either way, but too early for us to have a point of view or share that with you.
Okay. Thank you and best of luck.
Thank you.
Thank you. Next question is from the line of Manish Adhukia from Goldman Sachs. Please go ahead.
Yes, hi, good evening. Thank you for taking my questions. I have two or three questions all on quick commerce. The first one is on the inventory ownership. The first question is, are you going to move almost all of your inventory to 1P over the next two to three quarters, like you mentioned in the letter? And will the margin benefit also be immediate? Let's say if you were to move almost all your inventory in three quarters, will the margin benefit also accrue in that two to three quarter period, or will that take a slightly longer time period? That's my first question.
Yes, Manish, broadly, that's the plan. I think the assessment is right. That's what we expect. I think in that time frame, we should be able to move most of our business to inventory ownership, and the margin accretion should also happen in that time frame.
Understood. You talked about some of the things in terms of differentiation versus peer group, but in terms of you moving to inventory ownership and of course almost all of your peers still doing marketplace, would you say that it is a meaningful competitive advantage or it is an advantage but does not really move the needle in a meaningful way from a market share perspective? What would your thoughts be there?
I mean, like I leave that for you to comment here. I mean, we do not have any point of view on competitors' business model. I think you can answer questions on our business.
Got it. You talked about the visibility on dark stores where you said you have 3,000 store visibility, but update on those you'll probably give after you reach 2,000. Does that statement mean that you are getting to 3,000? Timeline is unclear, but the number is 3,000 you will eventually get to. Is that how we should read that statement?
Yes, that's right.
Understood. Got it. Maybe a related question there is that like today, now you are like north of $5 billion in GOV and you know MTU is north of 15 million, maybe industry at $12 billion-$15 billion GOV. I mean, from an industry perspective, Akshant and Albindar, do you have like any sense as to when does this industry start tapering off, if at all? Like, I mean, just trying to get a sense as to where do you think eventually MTUs or GOV of the industry may end up, in your opinion, in the next two to three years, if you have any thoughts on that?
I think the growth momentum remains strong. At least for the next two years, we feel that the growth rates will be high as we still are building out more infrastructure and getting to 3,000 stores will take time. Right? Beyond that, I think it's very hard for us to comment on how large this market could be. It's a function of, you know, how deep can we go in certain categories that are even small today. You know, how sustainable is, you know, economics in some of these categories? I think a lot of variables and unknowns still in the business, which will play out over the next one or two years. I think that will also dictate how large, how much of opportunity we have in terms of size.
In this business, Akshant and team, like I know you don't give out that mix, but is there like a path for like non-grocery to become larger than grocery, or do you still expect grocery essentially to continue to be like a disproportionate share of your GOV?
I think, Manish, that will follow the consumption trend overall of the country. I think if the household share of, you know, buying is always groceries higher, then I do not think, you know, you will necessarily see the non-grocery segment being bigger than that. It is actually much more related to how consumers, what are consumers buying rather than what is a platform offering. Since we are more of an everyday app and, you know, becoming more and more horizontal, I think the category trends will also mirror just what consumers buy.
Got it. Just last question, a follow-up on Ankur's question earlier. On competition, of course, like three months ago in your previous call, you were saying that the competition is probably getting worse and visibility remains low and when it improves. This time, of course, you've called out that you expect margins and absolute losses to get better. The interpretation of that would be, I'm guessing, that competition has gotten significantly better over the last three months. In that context, would you be able to give any new break-even timelines now for the quick commerce business, like as to when you can go back to that zero number, or that's something in the current landscape you may not be willing to provide?
See, Manish, that number is not important for us. Because, you know, it's a function of the varied average of mature stores and new expansion, right? Directionally, as you can see, the margins have improved from -2.4% to -1.8% in this quarter. What we are saying is we expect that trajectory to continue, subject to competitive intensity remaining the same, right? From here on, how long, therefore, does that take to cross zero is a function of like how fast we're able to expand. Expansion also is not fully in our control because it's dependent on various external factors. Yeah, I think we're not keen to give that number also because I don't, I think it matters eventually. Parts of our business, as I mentioned, are already at 2.5% margin. The rest of the business catching up is a function of time.
Thank you for taking my questions. All the best.
Thank you.
Thank you. Next question is from the line of Aditya Soman from CLSA. Please go ahead.
Hi. First question, on your ROCE calculation on Blinkit, you've laid out the assumption of about 18 days of working capital. This is significantly lower than traditional retailers like DMart. Is this because you do not have to maintain as much shelf inventory, or is it just that your models allow you to minimize inventory just because you have a just-in-time model and can move much faster? Or does this mean that some of the inventory will still stay off the books?
I don't think it's a like-to-like comparison with something like a DMart because one of the largest categories, for example, general merchandise, they will typically have much higher days of inventory. That is owing to the way that they also source these items. I don't think that you can make that like-to-like assumption. However, because of the way that we replenish and the frequency at which we are actually able to move products in our supply chain, we are structurally better off than most retailers that you would see across categories in the days of inventory that we need to, days of cover that we need to have in order to make sure that there is good availability for customers.
Fair. No, that's clear. Secondly, I mean, in your statement on competition, you've also mentioned that, I mean, there's a clear trend for you at least, that speed, assortment, and customer support are almost more important than price. Does this mean that we are seeing the segmentation of the market as we've seen everywhere in the world with sort of the players like Reliance or DMart going after value and Blinkit effectively filling the gap in India for the convenience channels since we just don't have any supermarkets or convenience stores here?
I don't think that we'll be able to classify that because our business works with all of these things together. The flywheel around delivering, you know, pricing value to customers is also something that we focus on and we can't ignore it. Our customers also need to feel that, you know, they get the best prices on our platform as well. I think for us, all of these things have to go together. You know, sort of the segmentation of the market, I don't think it then remains a question of, you know, whether customers are going to fulfill their needs via a different, you know, value proposition, which is maybe two-hour delivery or three-hour delivery, and therefore they will get more value. I think we have not, we are not keen on exploring that segment.
We also think that the moment it moves out of the 10 minutes, then the entire equation changes. Maybe the value that you need to deliver will be much, much higher. Whether that would be sustainable or not, we are not entirely certain. You know, therefore, we don't think that, you know, you will be able to take each of these and then create different segments out of the market.
No, understood. Clear. The last question on HyperPure, you've indicated that part of the business will sort of come off just because there was sort of the marketplace business for QC. Can you give us a breakdown of how much was the restaurant business and QC business within HyperPure?
Aditya, we've given that breakup in the last shareholders' letter. If you could refer to that, we have the breakup by both restaurant and the non-restaurant business for the last four, five quarters.
Understood. So it will be roughly in that ballpark even for this quarter, right?
Right.
Cool. All right. Thank you.
Thank you. Next question is from the line of Swapnil Podduke from JM Financial. Please go ahead.
Hi. Thanks for the opportunity. I have three to four questions. First one on Blinkit, my person. You're already close to around 17 million MTCs versus 23 million in food delivery. I would like to know what % of your quick commerce users are unique in nature, which probably will not be transacting, let's say, on your food delivery side?
Swapnil, we don't, we have talked about it in the past, but we don't disclose that metric anymore. The number of unique customers in quick commerce is increasing. It's on an increasing trend because we also cater to very different, logically, we cater to different customer segments as well.
I mean, the overlap is not very high is what I would say. On both sides, which is fairly distinct.
Okay. Got it. The second question is with respect to your top cities' share in the overall GOV or NOV, whichever you want to look at for the Blinkit business. Any sense as to how has that moved from the previous quarter?
Not a very significant movement, Swapnil. I think majority of our business is still top 20 cities.
Okay. You did mention that the NOV difference is just about 10% between your bigger cities and smaller cities. The margin difference at this point of time would be significantly bigger because you mentioned 2.5% adjusted margin for some of the cities. Lower- tier cities would be significantly higher at this point of time?
Sorry. The question is not clear. Are you saying lower cities will be higher on margin or lower on margin?
The losses in that business will be significantly higher in percentage terms.
I think it's a function of the age of the store and also our relative market position in a city rather than actually it being a small or large city. Right now, we are not seeing too much of margin difference between small and large cities. Of course, the newer stores that we've opened are loss-making because of the fact that throughput is still low. I think that's where the difference between margins comes up between the stores. It's more to do with the age of the store than with whether it's tier one or tier two.
Also, to add to that, Swapnil, Eternal supply chain investment in tier two and tier three cities is also more greenfield, and therefore, for the short term, there's usually higher margin pressure on these cities because we are actually building out a brand new supply chain over there to be able to supply better. Sometimes the utilization of that is also worse off.
Understood. One question on your food delivery business margins. Because your commentary seems to suggest that, going forward, you may end up sacrificing some margin to drive growth. I mean, if I were to summarize what you have mentioned in the shareholder, is that understanding correct?
I mean, there's always a trade-off. I think what we are saying is that while in the long term, we think margin expansion is possible, but in the near term, we are more focused on growth and hence therefore the margins could remain around the marks they are today.
Got it. How do you see your going out losses in the near term? You did mention the Bistro. Expectations of losses in the Bistro business or the investment that you plan to do. Going out, you have given a slightly longer-term commentary versus a short-term trend. Any sense on that?
Yeah, I mean, we don't want to provide any guidance on the short term at this point, but I don't expect the losses to meaningfully increase from where they are. I think they'll remain range-bound in the near term.
Got it. And just the last thing on Bistro. What would be the AOVs currently? And any sense as to where do you see those AOV going for that business?
We're not disclosing that, Swapnil.
Okay. No worries. Cool. Thanks a lot, guys, for the opportunity and all the best.
Thank you.
Thank you. Next question is from the line of Yogesh Agarwal from HSBC. Please go ahead. Yogesh, can you hear us? Seems like we're having some technical difficulties. We'll move on to our next attendee. Next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead.
Hi. Good evening, team. A couple of questions. First is on this IOCC and 1P. Let's say you have about 1,500 plus stores. In two to three quarters, when you say that you will move to 1P, is that for all the stores or is there, you know, you need to do bottom-up to figure out which stores you should do 1P and which you should do 3P?
Not, hi, Vivek, this is Kunal here. Our move to 1P is not necessarily linked to stores, right? Stores are just a point of storage. I think the broader idea is who owns the inventory on the balance sheet. I think that what we're saying is eventually most of the inventory will be owned by us as the company.
No, sorry. What I meant was, yeah, so what I meant was from an inventory standpoint, not from store. I mean, when I said store, I meant inventory. Is there any thought process or it's like lock, stock, and barrel, you move to 1P because it makes sense everywhere, wherever you are in the country?
I think we've mentioned it very clearly in the letter and also in the call to a previous question that we intend to move most part of our business on our own inventory. So yeah, that's the plan.
Okay. Akshant, in that context, there is an impact on balance sheet. There is an impact on, you know, margins. From a top-line perspective, NOV, GOV, revenues, it does not change anything, right? You, in which ways, basically, will something change from an assortment perspective by virtue of moving it to 1P and therefore on GOV, NOV, or it stays the same? It is only the balance sheet and the margins.
Vivek, we think on the assortment side, like nothing will change in the selection. Because moving to 1P reduces the administrative burden, the licensing burden, all of that significantly for both us and the brands, we do expect that there would be some positivity in terms of operational metrics around availability, fill rates that will improve on the platform. Otherwise, nothing is changing on the trajectory or the business itself.
On margins, we've already described the impact in the letter.
Right. So margin part, so interesting. You are saying at the margin, there can be, you know, some positive impact on the top line also. That is interesting. The last bit is, you know, when we look at quick commerce, let's say contribution margin versus adjusted EBITDA. Let's say contribution is flat and adjusted is getting better by 60 basis points, for example, sequentially. What does that imply? It is essentially the marketing, branding, or the corporate overheads because of leverage. Can you just explain this bit?
That's what it is, what you mostly marketing.
This is mostly marketing.
is also operating leverage on the fixed cost. Both of them, yeah, those are the two costs below contribution. On both, there is improvement in terms of percentage margins.
Got it. When you move to 1P, that will show up in contribution margins, right?
What will show up in contribution margin?
I'm saying your, you know, you mentioned about 100 basis point spreads.
That's right. Yes.
Beyond that, Akshant, so that 100 basis point, if we leave aside, from here on, the contribution margins will drive the EBITDA margins except the leverage and marketing spends are optimized. Is that fair or there is still some scope on marketing also?
No, I think so. I mean, the operating leverage below contribution will remain because even if these costs remain as is in terms of absolute amounts, the top line will scale, right? I think that the operating leverage to that extent will continue to accrue.
No, no, that's what I'm saying. Operating leverage will continue. Other than that, will there also be leverage on the marketing spends, you think? Or will the rest of the delta come from contribution margins only?
I'm actually not clear on the question.
No, Vivek, I think.
We're trying to figure out whether, you know, the marketing spends are going to go down. I don't think the answer is yes. I think, you know, I think we will look to be more aggressive even going forward. Whatever we are saying is we are also accounting for the fact that we will look, we will stay aggressive, but maybe do not need to be, you know, maybe because of the competition, if the levels stay at the current level, we do see an improvement in the overall margins in the business.
Okay, got it. Lastly, you know, you are on 3.9% contribution margin this quarter on the NO V basis. Last year was 4.9%. Do you think directionally you get to that in next, without the 100 basis point IOCC impact, you think you get to that in next few quarters on contribution?
Yeah. Again, I think we have already, we shared that our margin will improve over time. Yes, I think eventually the contribution margins will increase. What your question is on timeline or whether the contribution margin.
It's on the timeline, Akshant. See, look, 100 basis point delta comes from IOCC 100. So basically, there can be 200 basis point swing, which is what I'm trying to get to. It's possible in next three, four quarters, right?
We're not giving any such guidance, Vivek. I think we've already shared a lot of information in the letter, right, which gives a sense directionally of how we think of the business. I think asking for more detailed quarter-by-quarter projection, I don't think it's fair. I mean, it's a competitive market. I'm requesting to please like refrain from getting the next quarter projections from us because I don't think that will help the business or our shareholders.
For sure. The letter is very well written, I must say. Yeah. Thank you.
You're welcome.
Thank you. Next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Hi. Thanks for taking my question. I have three sets of questions. The first is on the leadership. You mentioned two years of rotational style with limited timeline forces leadership to perform with urgency. Because there is a limited window to create impact. So my first question is, how do you really measure this impact? Like what are the KPIs under which you measure and you decide that the stint can be further extended or not?
I don't think we want to discuss and disclose that here. I don't think that's the conversation we want to have on this call.
Okay. No problem. My second question is on understanding the bits on the contribution margin in the quick commerce business. Ideally, with your expansion ratio coming down as number of stores, as percentage of the new stores, as percentage of existing stores keep coming down, your contribution margin should keep moving in the right direction. This quarter was largely flattish to down. Just trying to understand what are the various moving parts that go inside which drives your contribution margin movement.
In addition to what you said, Gaurav, which is one element of contribution margin is driven by the share of new stores, I think there are other sort of elements that impact it. One, for example, we mentioned that the seasonality impact on certain costs, you know, especially delivery partner cost. Two, there is competition. You know, competition also has impact on various lines in the P&L pre-contribution. Of course, there is infrastructure build-out in the form of warehousing as well, right? Apart from stores, you know, some of the warehousing expansion is more lumpy where you invest upfront, but you start seeing utilization over a slightly longer period of time. I think these other three factors also play into that eventual contribution margin, and therefore it will not be only linked to the share of new stores.
Just to add to that, I think also seasonality with respect to what gets sold on the platform in terms of the mix of the categories. That also changes, and that could have an impact on the gross margins in a particular quarter, right? That also has a part to play.
Got it. My last question is on food delivery. You did talk about growth bottoming out. What are the initial things that you're watching which is making you a lot more confident on this sustainability or of improvement in the growth trajectory? The related part is also on these food delivery partners. If you look at the last three to four quarters, it's stagnating around a particular number while the orders might have grown. How much of leverage do we have to keep pulling this metric in terms of not being able to grow this delivery partner number while our order numbers keep growing? At some point in time, it kind of, you know, the ratio may get maxed out. Thank you.
Yeah. So Gaurav, on your second question, I think the number of partners is an indicative number that we share to give a sense of the size of the logistics fleet. But really, the metric that is directly linked to the size of the business is the login hours of these delivery partners. Because as you know, these are all gig workers. The number of hours they spend changes, and that's also seasonal. We see a lot of delivery partners spending less time on the platform in certain months, around certain festivals, and vice versa, more time around other times in the year. That is the first point I would like to make, that I think the number of delivery partners is therefore always not necessarily equal to the login hours that we get.
Secondly, I think utilization, or rather the idle time of delivery partners on a platform, continues to come down. As that happens, they're able to do more orders with the same number of login hours that we have on the platform. That's actually a good thing because it makes our business more efficient while at the same time it increases the earnings of delivery partners. Therefore, I don't see a constraint in terms of availability of delivery partners on the growth of the business at this point. I think if the business grows and we need more login hours on the platform, we think scaling that should not be a challenge.
On the growth bit of food delivery?
Yeah, I mean, so what we have shared is that, basis what we have seen so far, in the first three weeks of the quarter, we think that the underlying growth sort of bottomed out, and we are seeing now a higher, a better app opens from our consumers, better redirection rates. The early signs is why we think that we should see better growth from here on. Again, still early in the quarter, and we'll know more during the course of the quarter.
Got it. Any meaningful change in the churn ratio or retention ratios? Which also drives slightly better confidence than before?
Yes. I mean, like, I mean, when sort of the frequency goes up and we're seeing more, the customers returning back to the platform across different markets, I think is why we feel that this quarter would be better than the last one.
Got it. Thank you and all the best for the future.
Thank you, Gaurav.
Thank you. Next question is from the line of Vijit Jan from Citigroup. Please go ahead.
Yeah, thank you for the opportunity. My question on quick commerce. So you know, looking at just the AOV, and I know. You know your comments from last quarter around, you know, not really looking at driving the basket sizes up. But just in that context, given the AOVs in the smaller cities is 10% lower, I wanted to see whether in the top cities, naturally, without, let's say, specific interventions from your side, are basket sizes still continuing to rise? Or you feel like you know.
Over the longer time horizon, yes, they're continuing to rise, but sequentially, you might see differences because seasonality plays a very, very big role in the AOVs.
Okay, got it. My second question on the, you know, switch to inventory model. You know, just looking at marketplace versus inventory model for a second here, right? In terms of, you know, how small sellers or D2C brands, those kinds of people get onboarded or featured or promoted on the platform. You know, does anything change at all with this switch in terms of, you know, I'm guessing some of them would at least want to feature products on the platform that they want to promote and those kinds of things. Those things, do they change at all under this new architecture or continues to go onwards as it was earlier as well?
No, Vijit, the tools that the brands use to promote themselves, to advertise on the platform, or to also feature some of their products, all of that remains exactly the same. The only way to sort of look at it, this is more of an administrative change for us and the brands. It just makes the, you know, the burden of compliance a little bit easier for them. Commercially, nothing changes dramatically. Of course, because it becomes a little bit more efficient for everybody involved, that is why we see a margin accrual. Otherwise, life stays exactly the same.
Got it. So no change in whatever discretionary decision-making could have existed with the brands earlier in terms of, you know, what they wanted to feature?
Yeah, yeah. So the brands still have all the control.
Got it. The last just bookkeeping question, if I remember this right, usually you have annual wage revision impact in September quarter, at least in Zomato, if I remember right. Has that changed here or should we expect that kind of a fixed cost increase next quarter?
Also, the appraisal cycle remains the same, Vijit.
Okay. Got it. Okay, thank you. So those were my questions.
Thank you.
Thank you. Next question is from the line of Rishi Jhunjhunwala from IIFL. Please go ahead.
Yeah, thanks for the opportunity. A couple of questions here. Firstly, on food delivery, if we see our NOV growth has come down from, say, 27% year- on- year last year, same quarter to 13% now. What would you attribute to be the major driver of this? Is it mostly the ordering frequency? Secondly, when we are talking about the number going back to 20% plus next year, where would that incremental growth come from between frequency and AOV?
Hi. Rishi, this is Kunal here. Essentially, look, I think eventually it comes down to, you know, the number of customers transacting on our platform and the average order values. I think, you know, there has been, you know, a slight slowdown in the number of transacting customers and the number of app opens that we're seeing on the app during the year. Therefore, year- on- year, some of that growth has been impacted. We've talked about it over the last couple of quarters. I think, like, you know, we said earlier in this call as well, the expectation is that the transacting customer growth should be higher as customers return to, you know, the app.
Understood. The second question is on quick commerce. Our average GOV per day per dark store over the past four, five quarters have been, you know, extremely stable despite the fact that the number of dark stores have gone from 600 plus to 1,500 plus. Just trying to understand if you can give some color on throughput from your, you know, relatively mature dark stores, where do they end up stabilizing or if at all they are? At what level of GOV per dark store do you start, you know, dividing the presence in the same area?
To the first part, Rishi, we do not actually know. We still have not reached the point of hitting max throughput capacity at stores, at any of our stores. Of course, the more volume we do from a store, we also learn and we adapt to it as well. To the second point, we do not disclose that information. We think that is a little bit, that is part of our strategy as to how we go about actually opening stores. That is not something that we disclose publicly.
Got it. And just one last thing. In terms of ESOP costs, from an expectation perspective, you know, what trajectory should we think about? Is there any change in the recent past around that?
Rishi, in the past, we have given a guidance on our total employee cost as a percentage of revenue, which includes both the cash compensation and the ESOP charge. I think two quarters ago maybe, and then before that also. I think we're still sticking to that guidance that we were given last time.
All right, great. Thank you so much.
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 Sachin Salgaonkar from Bank of America. Please go ahead.
Hi, thank you for the opportunity. Three sets of questions. First question is on quick commerce. I do see now a bit of a divergence in business models between how a Blinkit is functioning and how your competitors are functioning. What I mean by that is you guys do not have mega pods, you do not have the max server equivalent kind of an offering. I do understand the focus is more to deliver in a 15-minute time frame versus, let's say, what the max servers and equivalent are delivering. The question out here is there is a good amount of opportunity to also focus that base who does not necessarily want everything in 15-minute basis. Out there, the AOV is much larger. Any thoughts in terms of going and targeting this base, where it is just not 10-15 minute delivery, but maybe a 30-minute to 40-minute delivery time frame?
Sajan, we don't see the opportunity there, so that's why we are not doing that.
Okay. Any specific reason why you don't see the opportunity out there?
I think, you know, maybe we are not smart enough, so that could be the possible reason.
Clearly, you guys are. Okay, next question, you guys did mention dining out, movies, sports, concert ticketing as a focus. Any thoughts of also focusing more on travel? Because there is a good amount of opportunity to cater to the premium user base out there also.
Not at this point, Sajan. I think we remain focused on the existing set of use cases for now. A lot of work to be done on those ones. I think in future, of course, we can evaluate anything, but right now, I think in the near term, we'll remain in the categories that we are in today.
Got it. Next question on food. Clearly, you guys are indicating growth could be a bit slower than 20% for this year. I do think, you know, basis your shareholder letters, there are a couple of historical issues what you had highlighted. One, as quick commerce becomes big, clearly there could be a bit more impact in terms of food growth. And second, you know, at some level, you know, obviously there's a bit of a slowdown impact. The second, the first issue what you guys had mentioned in the past, you know, has a potential of becoming bigger and bigger as the quick commerce size becomes bigger. Of course, you know, there's a bit of a competition uptake. Any general thoughts. Should the steady state growth be around 20%, could slow down a bit, but margins could be a bit better on the back of it? You know, how.
You see any risk to the overall growth for the industry out there in the medium term because quick commerce is becoming bigger?
Sajan, I think quick commerce has definitely been a headwind to some extent for the food delivery business because I think some of that consumption has also moved to quick commerce, right? Having said that, I think we still believe from a penetration standpoint and opportunity standpoint, we still do think that long term, the business can grow at 20%, although that visibility is not there for the near term at this point. I think there is enough going for us to be excited about the business. I think if we do well and we are able to innovate and unlock more use cases for food delivery on the app, then I think we can post 20% growth levels again.
Got it. Last question, I'm trying to understand if there are any accounting changes we should see on Blinkit from next quarter. The reason I'm saying is 1P is modeled as on an inventory basis and 3P on a take rate basis. As you guys move towards an inventory-led model, should we see any accounting changes in terms of overall numbers for the Blinkit business?
Yes, Sajan, so we have tried to outline that in question 12 of the letter in terms of three or four things that could change from a reporting standpoint. I'll request you to your attention to that question.
Okay, so you know, I mean, my question was, and I read that, you know, more from the take rate of the business changing and how the things move from that, you know, revenue calculation and so on and so forth.
Revenue will now become very similar to NOV because since we own the inventory and contribution margins, of course, will in terms of definition and calculation will not change. You know, there is an interim now gross margin of the business that we'll take a call whether you want to disclose that or not in the next quarter. Outside of that, I do not think anything else should change.
Okay, thank you.
Thank you. We will now conclude this conference call. Thank you so much for joining us, and you may now disconnect your lines.