“This has the potential to add ~80 bps to Instamart’s contribution margin when fully rolled out, while giving us greater flexibility and control over assortment, pricing, availability and day-to-day operations,” Swiggy said in its shareholder letter on October 22. The company announced that Instamart would start owning the inventory it sells from the middle of this quarter.
Eternal’s Blinkit began the same shift in 2025. About 90% to 95% of what Blinkit sells is now its own inventory, and its quick commerce business has moved from a loss to a profit over the past year. Blinkit’s quarterly figures show that its gross margin rose only slightly over that period, while most of the improvement came from lower overheads as a share of sales. Instamart, which still operates under a marketplace model, lost Rs 895 crore on the same measure in the September quarter.
Why couldn’t Instamart do this earlier? India’s foreign direct investment (FDI) rules bar foreign-owned e-commerce marketplaces from owning the inventory they sell. Both companies had to cap foreign shareholding to become Indian-owned and controlled companies (IOCCs) before they could hold stock.
Eternal’s board approved a cap on its foreign shareholding at 49.5% in April 2025, and Blinkit started shifting to inventory ownership that quarter. Swiggy’s shareholders approved the same cap this quarter, and domestic investors now own over 58% of the company, Swiggy said. Instamart will complete the shift over the next two to three quarters.
What has the shift done for Blinkit?
“We are at that steady state now, where about 90% to 95% is now 1P,” Eternal chief financial officer Akshant Goyal said on the company’s earnings call on October 21, referring to first-party inventory. “And so we do not expect any more incremental working capital change on that account.”
Blinkit owned about 80% of its inventory a year ago, as we reported at the time. Its quarterly figures since then, according to Eternal’s shareholder letter, are shown below. Margins are expressed as a share of net order value (NOV), and EBITDA refers to earnings before interest, tax, depreciation and amortisation.
| Blinkit metrics | Sep 2025 | Dec 2025 | Mar 2026 | Jun 2026 | Sep 2026 |
|---|---|---|---|---|---|
| NOV (Rs crore) | 11,679 | 13,300 | 14,386 | 17,132 | 20,940 |
| Gross margin | 26.8% | 26.6% | 26.9% | 27.5% | 27.5% |
| Contribution margin | 4.6% | 5.5% | 5.4% | 5.3% | 5.3% |
| Adjusted EBITDA (Rs crore) | -156 | 4 | 37 | 102 | 184 |
| Adjusted EBITDA margin | -1.3% | 0.0% | 0.3% | 0.6% | 0.9% |
| Stores | 1,816 | 2,027 | 2,243 | 2,443 | 2,751 |
| NOV per store per day (Rs lakh) | 7.71 | 7.50 | 7.68 | 8.27 | 9.02 |
Key takeaways from the figures:
- Gross margin barely moved: Blinkit’s gross margin, where the benefits of owning stock would first show up, remained between 26.6% and 27.5% over the year, rising by 0.7 percentage points.
- Contribution margin has slipped since December 2025: Contribution margin has slipped since December 2025: The revenue left after variable costs peaked at 5.5% of NOV in the December 2025 quarter and has since fallen to 5.3%. “New stores weigh on margins (and more so on Contribution) in their early months,” Akshant Goyal said in the letter.
- Overheads drove the profit: Blinkit’s adjusted EBITDA margin rose by 2.2 percentage points over the year, more than three times the gain in gross margin. Costs below the contribution line fell from 5.9% to 4.4% of NOV as Blinkit’s sales nearly doubled.
JM Financial analyst Swapnil Potdukhe asked on the call why contribution margin had remained flat despite an increase in sales per store. “Investment in new stores,” Eternal executive Kunal Swarup said. Sales per store also rose because “the store sizes have increased,” Eternal Group CEO Albinder Dhindsa said, adding that “the cost will also increase.”
Eternal does not break out how much of the improvement came from owning inventory. Cities that account for about 96% of Blinkit’s NOV now cover their variable costs, while those accounting for about 70% generate an adjusted EBITDA profit, Eternal said. Its mature cities operate at an adjusted EBITDA margin of over 5%.
What does owning inventory cost?
- Unsold stock: Inventory losses stood at 1.8% of Blinkit’s NOV in the June quarter, mostly on perishables such as fruits and vegetables, Akshant Goyal said in July.
- Cash: Eternal’s inventory nearly doubled to Rs 4,262 crore in September from Rs 2,181 crore in March. Its cash balance fell by Rs 1,813 crore during the quarter, mainly because working capital increased as Blinkit stocked up ahead of the festive season and food delivery payables temporarily fell, according to the shareholder letter.
Owning stock has also allowed Blinkit to sell slower-moving goods. It keeps “one week of inventory for air conditioners,” Swarup said. “We are comfortable doing that.” Blinkit also raised its estimated capital expenditure per store to Rs 2.5 crore from Rs 1 crore in July as it moved to larger stores.
What does Swiggy expect from the shift?
- Margin: An increase of about 0.8 percentage points in Instamart’s contribution margin once the shift is fully rolled out.
- Working capital: An eight- to 10-day improvement in its working capital cycle, which Swiggy says will offset the cost of holding inventory, with no “significant incremental working capital deployment.”
- Steady state: Net working capital settling at about 15 days.
Swiggy has not included the inventory benefit in its guidance. It expects Instamart’s adjusted EBITDA margin to improve by about 1 percentage point next quarter, excluding the shift, its chief financial officer Rahul Bothra confirmed on Swiggy’s earnings call.
Instamart starts from a much smaller base. Blinkit’s NOV of Rs 20,940 crore in the quarter was more than three times Instamart’s Rs 6,594 crore. BNP Paribas analyst Kunal Vora said on the call that the 50% gap between Blinkit’s and Instamart’s NOV per store per day “is persistent.”
“Blinkit enjoys a pretty strong flywheel that has been compounding over the years,” Swiggy managing director and group CEO Sriharsha Majety said on the call. “That is the reason why they’ve been able to build a more resilient business.”
Also read:
- Why are Blinkit and Instamart taking different approaches to private labels?
- Five strategic developments from Eternal’s Q2FY27 earnings call
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