Ladies and gentlemen, a very good evening and welcome to Eternal Limited's Q3 FY26 earnings conference call. From Eternal's management team, we have with us today Akshant Goyal, Albinder Singh Dhindsa, and Kunal Swarup. 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. You will wait for a minute while the question queue assembles. First question is from the line of Manish Adukia from Goldman Sachs. Please go ahead.
Hi, good evening. Thank you so much for taking my questions and congratulations on a good quarter. My first question is on the quick commerce margins or losses and congratulations on the break even there. In this quarter, if you look at numbers, your gross margin did not really expand. Store throughput was down about 6% QoQ, but despite that, your contribution margin expanded 90 basis points, EBITDA expanded about 130 basis points.
All of this is while you say that the competition is irrational. If you assume competition remains irrational, which is what you are assuming, then why should directionally margins not continue to improve at the same pace as what you did in this quarter? Would love to get your thoughts on that. That is my first question, please.
Yeah, hi, hi, Manish, Akshant here. I think, yeah, I mean, 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? Competition is not, I mean, the competition intensity, even if it's high, is not steady always. Right? 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. I think the margins is a function of various things. Competitive intensity is one of it. Even that, within a quarter or even in a longer period, the various variables is geography specific and so on.
Yes, I think directionally we say that margin should expand, but we are not able to confidently say that the pace of margin expansion will be same as what happened in the last quarter because the competitive intensity was high in the last quarter and therefore going forward should also be the same. I think it's a multi-variable problem with not a linear correlation with just one variable.
No, appreciate that, Akshant. Thank you. 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? Maybe a related question. You are saying in previous quarter, you mentioned that you want to grow at 100% YoY or expect to grow 100% YoY at least for the next one to two years. Now, you are saying that that 100% YoY growth is contingent upon competition not staying irrational. I just want to tie up that guidance that you are saying that if competition is not irrational, it is only when you will open 3,500-4,000 stores and only then you will achieve 100% YoY and overgrowth. Is that understanding correct? My first question was just on store throughput.
Yeah, broadly, that is correct. See, the way the competitive intensity affects us is in which form it comes. Last quarter, we saw a lot of competitive intensity get amped up because a lot of competitors went to low MOVs and zero delivery fees. We are also seeing a lot of discounting happen in the market. Therefore, it becomes a lot more complex for us to also be able to say which way the things will move and how we will have to respond. Broadly, what you've said is broadly correct.
On store throughput, Manish, I think it's a function of the fact that our assortment is now expanding. 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. I think over the long term, we do not see that as a concern. 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. Just my last question on this topic. Your growth is good. You said for like 130% YoY, you're expanding margins. Where is competition showing up? I mean, as of today, it's not really impacting you. Is that the way to read it? What needs to change for competition to start impacting your numbers?
We are not saying that, Manish. I think, I mean, there's always a way to look at things. One can argue that in absence of irrational competition that we are pointing out, things would have been much better than what they are today. That is also one perspective. The competition is impacting us, in terms of our outcomes and numbers, but it may or may not impact the decisions that we take in a particular quarter.
For example, in the last quarter, we did not see these freebies impacting our market share too much. Hence, we sort of sustained our pricing. As you might have seen last week, we did drop our delivery charges in some markets because we saw some impact. Overall, I think there is definitely an impact of competition. It impacts our margins. It impacts our top-line growth. It impacts our store expansion plans and various other things.
Just last question before I jump back in the queue. You've maintained your $3 billion NOV guidance for going out in 2030, which would imply north of 30% CAGR over the next four years. Last quarter, of course, was about 20% growth. One, why is the growth as low as it is right now? Two, what explains that meaningful expedition 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. 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. For us to deliver 30% CAGR over the next three, four years, it does not necessarily mean that the industry has to grow by that much. I think a lot of it can also come from market share gains. 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. 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. 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. 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 might have commented 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.
That is again a function, as I mentioned, that if a lot of our store addition last, not just last quarter, but last two-three quarters has been towards assortment expansion. As we now further expand the assortment, the turnover of the long tail is not that high as what we started the business with. There is always that negative impact of assortment expansion on throughput that we will continue seeing in the business. I think in this quarter, that resulted in a slight dip.
I do not think we should read too much into that at this point. 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 in absence of that, that 3% impact would have been less.
Yeah, I saw that. I was hoping it will expand given it slowed down a bit, but understand the answer. Just a couple of points on the cash flows. I can see that CapEx has gone up a bit this time despite fewer stores added versus last quarter. Also, your working capital days seem to be expanding. If you can comment on those two factors, please.
Yeah, so Ankur, as we mentioned in the letter, I think what we are our framework for thinking about CapEx and net working capital is ROC. And it's a young business. We don't have a playbook for how much NWC is going to give us, what kind of ROC, et cetera. We are being open-minded and first principles on this.
In the past, we have shared some assumptions on what CapEx per store could be going forward and what our sort of net working capital days in the business could be. Broadly, I think we are hovering around the same range right now. 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.
Even though we might see CapEx per store going up over the next few quarters, we do not expect net working capital to be beyond that 18 days that we had shared earlier. That should remain within the range. Hence, as a consequence of that, the ROC outcomes should still be north of 40%. I think that is what we are solving for.
Understood. Thank you, Akshant.
Thank you.
Thank you. Next question is from the line of Swapnil Potdukhe 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 tech rate to contribution margin expenses?
I think Swapnil, it's mostly to do with the mix change. There is this impact of seasonality also over there. Then some of the other factors also impact like what product mix we end up selling in the quarter. The cost efficiencies, I think most of the benefit, as you see, are on the cost side below gross profit. 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. Going ahead, given that you also mentioned that you have cut down your delivery fees in certain markets, that in my opinion will put some pressure on your take rates. How much contribution margin expansion will realistically be possible for us to sustain, let's say, in the next quarter or so?
Yeah, for next quarter or even two, we do not want to comment anything, Swapnil. I think I hope you will appreciate that. We have mentioned that in the letter, tried to explain what are the various reasons why this might be a little volatile in the short term. 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.
In the short term, I mean, just to add, I think longer term, in our letter, we have mentioned that our confidence on margins going to 5%-6% of NOV remains high. We have shared data on a couple of CTEs in our business where we are already at 5% registered EBITDA margin. The way we think about margins is therefore, 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.
In the short term, we want to take the right decisions for the business. That would mean taking a margin hit if we have to do that. We are open about that. We are not saying that is going to happen next quarter. These decisions are going to be tactical and taken real time. A lot of it depends on how the market shapes up over the next three to six months. That is why the unpredictability on margin from here on.
Got it. Can you just clarify because there have been a few changes in the labor code this time around? How much of those costs are already baked in your margins today? I am 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. Secondly, because of the changes on the gratuity side for some of the fixed-term contract labor. If you can just, if any of that is already in the margin or going ahead, we will have to face that challenge.
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. 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.
On your second part on gratuity and leave encashment, our assessment is right now that there's no impact on our business on account of that. Again, there are a few outstanding questions there that will get more clarity over the next few days. If there is, then next quarter will reflect that. I don't expect that to be meaningful at all.
Got it. Just the last one on the going outside. I mean, our previous thought process was that the losses in that business will be around INR 60-70 crore maybe quarterly-wise. There has been a sudden jump in this particular quarter. Against that, we did not have that kind of a growth as well, 20% YoY. Is there any scale-up in investments that you had done and that is going to sustain? How should we look at that? Was there a bunch of some investments this quarter?
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. A large part of the increase in losses was on account of rolling that out. I think that will not impact the top-line numbers in this quarter, given the effect will be compounding over the next few months. We think it's the right step now. I think it's going to drive multi-category usage on the app. I think we'll keep evaluating whether we need to continue this investment or not. Irrespective of that, as we mentioned in question 13, we expect now the losses to come down sequentially from here towards break even in the next four to six quarters.
Got it. 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 Kotak 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 basket pricing by 3%, and this should help in higher demand. Did this play out in the manner you had envisaged in Q3?
Some of it did, but there were also supply challenges because of the transition. 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. Do you continue to lead the Blinkit business, or should we expect some internal leadership changes?
Garima, as we mentioned in the letter, we continue to operate like we are operating. I think still as a team, Akshant, Deepi, and I will continue to do whatever we were doing, including me leading the Blinkit business. Operationally, nothing changes for us.
All right. Thank you, and wish you the best.
Thanks.
Thank you. Next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Hi, congrats on stellar performance this quarter. My first question is on your comment around 100%+ growth, which would be possible with 3,500+ 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? 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, which brings down the throughput for you?
Hi, Gaurav. No, I think we never mentioned that the 100% growth from here on will happen with just 3,000 stores. We do not think that is likely, although possible. 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 your market share and deliver whatever profitability you have, or there will be need for more interventions if the competition remains at the current levels?
Hi, Gaurav. 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. We will have to respond to a fairly volatile environment. I do not think we can just stay at our intervention and then hope that the competition also stays at the same thing. I think people will change. There will be more competitive, and we will have to also respond to that.
Got it. My last question is on how to look at the break-even on a cash flow basis in a quick commerce at the steady-state margin that you are talking about on 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. I think ROC of 40% plus is how we think about.
I think his question is that what does that mean for free cash flow margins, right? Free cash flow over revenue?
Yes. Yes.
Yeah, Gaurav, we haven't looked at that yet, honestly.
Okay. Thank you.
Yeah.
Thank you. Next question is from the line of Gaurav Malhotra from Axis Securities. Please go ahead.
Yeah, hi. Thanks for the opportunity. Congrats on a good set of numbers. Just a couple of questions. In the shareholder letter, you mentioned that 90% you guys have shifted to inventory. The remaining 10%, which you said you will not shift, what is the assortment there? Is it like electronics, lower moving goods, higher ASP items? 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. 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 backend than we would be able to do that. That is probably the kind of SKUs that contribute to that number.
Got it. Got it. Just on food delivery, you did take down the delivery charges. We are seeing some, obviously, growth coming and picking up. From here, do we expect growth to further accelerate, or it sort of will remain in this kind of ballpark?
Gaurav, 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%-100% year on year. Sorry, Gaurav, I misunderstood. Your question was on food, right?
Yeah, yeah. It was on food. It was on food.
Yeah. As of now, as we mentioned, we expect the year-on-year growth to continue slowly trending up towards 20%, which is what our current sense on the market is.
Got it. Okay. Thank you.
Thank you. Next question is from the line of Sachin Salgaonkar from Bank of America. Please go ahead.
Hi. Thanks for the opportunity and congrats on a great set of numbers. First question is the move towards your inventory model. You guys said in the shareholder letter, half of the 1% accretion has already happened. Should we expect the remaining half point to come in the next three to six months? When you think about it, could the benefit be more than 1% out here?
Yeah, Sachin. Yeah, I think we should, I think the full benefit should accrue more like in six to nine months. Yeah, we do not think the benefit will be more than 1% that we mentioned.
Got it. Second question is, any broad sense in terms of the store additions that are happening in Tier 2, Tier 3 city? Is the economic 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 onto where we are opening stores. The contribution at the contribution level, the economics for us are fairly similar, even though the headline numbers might be different depending on Tier 1 or Tier 2.
Got it. Albinder, my question was more on the long-term steady-state margins. This should also be 5%-6% of NOV, right, in Tier 2, Tier 3 cities?
Correct.
Got it. Every quarter, you guys surprise us positively in terms of looking to add more stores. When we take a four-year, five-year view, how big could this entire quick commerce dark store 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. 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. We are also finding out as we go along. Whenever we know better, we will sort of keep guiding through 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. From a mix perspective, right now, where things stand, is it 70-30 mix where 70% of stores are still in top-tier cities and 30% in Tier 2, Tier 3, or could that ratio change?
I don't think they're providing this breakup, Sachin.
Got it. My last question is generally trying to understand, for example, a place like Bengaluru, where every platform focusing on quick commerce is aggressive, which perhaps may 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 directionally.
I think from what the information we have in most of the Tier 1 markets, which is the metros, we have largely maintained our share of NOV. We know that now there is competition in almost all of the cities. 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 Jignanshu Gor from Bernstein. Please go ahead.
Hi. Congratulations to Albinder again on the position. I had one question on just understanding the growth that we have seen in MTUs, especially on a dark store per store basis, right? Our ad spends have not for QC when I look at the gross versus Consol versus standalone numbers. We do not really seem to have spent a lot more on ad despite the competition. We seem to be getting a lot more organic users. What do you think is attributable to this on a per store basis, continuing to get more users and not just AOVs?
Just assortment.
Sorry.
Jignanshu, it's more related to assortment expansion.
That should ideally then translate into, and that's the second question, into higher frequency of orders per customer, right? That seems to have gone down. Is there a replacement happening? That's the circle I wasn't able to square, frankly.
No, I think that's not as linear a relationship as you think. If customers are coming to us through categories, which are expansion categories, then the frequency doesn't necessarily go up because frequency driver categories are not the ones that they might be entering through.
Okay. They are coming for expansion, but not necessarily doing the core transactions yet on this platform.
The trajectory might be different as we expand assortment more.
Understood. Great. Okay. Just a second follow-up on one of the questions I think Garima asked regarding leadership. Does the Blinkit plus food and other going out, or the entire leadership below the three of you remain as it is, and there is no change? Is that the right way to think about it, at least for now?
That's right.
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. In the letter, you mentioned that CapEx per store will increase henceforth. Why is that? Are we also moving to a megapod structure?
Abhishek, 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. That would explain the increase in CapEx per store. Also, we are investing a lot more in automation now. 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. In general, our store size is going up every quarter.
Is that for more assortment or any other reason?
Yes. I mean, for us, I mean, it's a function of availability of real estate. It's a function of how we want the store design to be. Because of that, I think there's a trend which is taking the store size up. CapEx per square feet of space addition is not going to go up as much as CapEx per store would.
Understood. Now, for Bistro, you mentioned that you are seeing some early signs of a product market fit. Can you please elaborate on that? I mean, what kind of scale-up can we realistically think here?
Yeah. Abhishek, I think product market fit for us, when we say that, we mean that, one, I think on the customer side, there is genuine value being created for which they come back to the platform and transact. Equally, from an economic standpoint, 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, right?
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.
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. Hence, at this point, our plan is to continue investing in this business in a sort of cautious way. At some point, like Blinkit, 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? We will keep all of you posted on this every quarter.
For you, this is convenience plus value, both? I mean, just trying to compare with drawing that Swiggy has come out.
Not just convenience and value. I think it's also assortment menu, right? I think there's a cuisine gap in the market, which I think Bistro fills. That is also why we don't see this business cannibalizing the Zomato business, right, wherever we have these stores.
Understood. One last question from my side is in the business letter, you mentioned that unless your shares would come back to the employee pool. What kind of an expansion would the use of pool then have? How do you think you would 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 an 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 INR 200 million shares. So his ESOPs will perhaps expand that pool by another INR 33 million shares, right? The grant from this pool is a function of the board allocating ESOPs to different employees based on their performance, etc., right?
Grant is therefore, the grants are not going to go up just because the pool size went up. Because the pool size went up, we may not need to dilute our ESOPs again for slightly longer than what we would have otherwise done. I think that's what we're trying to say here.
Understood. Any visibility on how much of an unwill you have with current 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. That will be all from my side.
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 additions. Did you close any stores during the quarter?
Yeah, Kunal, just regular closures that happened for different reasons. That is why it's net store addition.
Okay. 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. There has been rapid expansion over the last few quarters. Do you see a need to review some of the stores? Similarly, there are cities, like 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 e-comm players which have also expanded? Physical retailers such as JioMart also are talking about almost 800 dark stores and 1.6 million daily orders. Are you seeing any impact of these players, at least in the Tier 2, Tier 3 cities?
See, I think for us, competition is everybody who's trying to gain a market share of the eco online buying pie. I think everybody's included.
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? How is the experience beyond the top cities? How many cities do you see a potential in?
We are not disclosing that. Kunal had mentioned that before also on the call.
Okay. Okay. Okay. That's it from me. Thank you.
Thank you.
Thank you. Next question is from the line of Nikhil Choudhary from Nuvama. Please go ahead.
Yeah. Thanks for the opportunity. Congratulations on achieving break even in Blinkit and Hyperpure. First question is on 100% growth part. Last quarter, you have mentioned that you can deliver 100% YoY growth for next two years. If the opportunity size is so large, which we believe highly should be, why can a short-term change in competitive intensity derail it? Especially when you guys have already achieved break even, you are talking about investing on market share gain. What is stopping us from achieving this 100% growth? What has changed basically in one quarter?
Nikhil, our viewpoint on this is that 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 in taking share away. 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 share, but we are not seeing that kind of competition.
Got it. Thank you. Second, does the behavior remain consistent across the player, or is it more limited to incumbents? What I meant to say is, are new players like Amazon, Flipkart, and JioMart also resorting to this kind of competition now, or is it more limited to incumbents?
Nikhil, 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 FY2027 or maybe in two to three quarters?
Very hard to say, Nikhil. I think these things keep changing for reasons which are beyond our control. 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. If the demand expands, we don't need, unlike Blinkit, we don't need to build infrastructure to service it, right?
Whatever is the pace of growth of consumer demand in the country, I think our job is to make sure that we are able to cater to it. 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? I think we just stick to our job, and we don't want to take a guess on how this will grow from here in terms of growth rates.
Got it. Just 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 Deepinder may be taking more executive role?
That's not the plan, Nikhil. I think Deepinder, as his letter mentions, he's going to continue to be involved in the way he was in the past. I think there's a lot to be built at Eternal right now. Most of our businesses are young, including food delivery. 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. Good luck for the coming period. 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 Vijit Jain from Citigroup. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Congratulations, Albinder, on the elevation to the CEO role and to the team for the break even. My first question, you said earlier that store sizes in general continue to go up every quarter. I'm wondering, as you densify in mature cities, are store sizes going up there as well? Related question to that, when you say automation in stores, could you talk a little bit about where the automation will come in the stores? That's my first question.
Hey, Vijit, on the first one, yes, the store size is going up across the board. 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 mentioned earlier, you talked about assortment changes as business grows and matures. In terms of the metrics that you track, is gross profit per sq ft per day? I know you've mentioned these metrics in the past. Is still the North Star, and do you care about maximizing order throughput per dark store per day at all? I'm just trying to get a sense on this because there are certain conversations that tend to focus too much on orders per dark store per day.
Vijit, we do not really have those kind of targets, whether it is orders per day or sales per sq ft. 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 is the direction that we end up going in.
Got it. Thank you so much. Those are my questions.
Thank you, Vijit.
Thank you. We will now conclude this conference call. Thank you for joining us, and you may now disconnect your lines.