Eternal Limited (ETERNAL) Earnings Call Transcript
July 22, 2026
Earnings Call Speaker Segments
Ladies and gentlemen, a very good evening and welcome to Eternal Limited's Q1 FY '17 Earnings Conference Call. From Eternal's management team, we have with us today Albinder Dhindsa, Akshant Goyal and Kunal Swarup. Before we begin, a few quick announcement for the attendees. Anything said on this call, which reflects outlook for the future or which could be construed as a forward-looking statement. 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. [Operator Instructions]
The first question is from the line of Gaurav Malhotra from Axis.
Yes. Congrats on a good set of numbers. Just had a couple of questions. Firstly, you seem to have raised the long-term guidance in quick commerce from 5% to 6% towards 6%. So what gives you this confidence to do this now, especially when there is sort of competitive intensity in the sector?
Yes. Gaurav, so I think like this is basis what we are seeing in the business. I think what we're trying to communicate here is that over time, we have increased the CapEx per store in our business, right? And some of these investments are leading to increase in efficiency in the business. It's also a function of increase in average store sizes, et cetera. So all these investments are clearly lining up in a way where we have now higher visibility on the margins. And we think at this point that we're likely to end at the higher end of the range that we had guided earlier and hence, the communication.
Understood. Okay. The next is, you mentioned the sort of the older cohorts spending 3x versus 3 years -- 3x versus 3 years back. Just wanted to get a sense of the split between how much of this is related to order frequency and how much is it related to the AOV growth?
So Gaurav, we don't share that data, but directionally, most of it is frequency growth, I think, with passage of time for a customer cohort, we see that AOV kind of stabilizes. It grows but only slightly, and most of the growth comes from frequency growth.
Got it. And just one last question. How much of this growth that you are seeing at an aggregate level [indiscernible] how much of it is coming from existing cities versus geographical expansion?
I think most of it is from existing cities.
Next question is from the line of Vivek Maheshwari from Jefferies.
Hi. Good evening, team. My first question on like two parts. On your question -- response in question #8, you mentioned two points. If you can please elaborate on that. You have started with a statement, no competitive intensity remains high, but it has become more predictable. Can I request if you can elaborate on this? And do you also think that this is, let's say, the first quarter has been the peak of competitive intensity or the phase where we are the highest competition is at this point of time?
So first quarter, so far, it was the peak of competitive intensity that we have seen till date, both because a number of players are higher and everybody was more aggressive. But when we look at competitive intensity and the way that it has evolved over the last few quarters, what we are seeing is that most of the competition is coming in providing subsidies to customers on products and also on delivery fees. And that is what has become more predictable, that most competitors are going towards grocery subsidizing, which we are fairly clear on what we do in that and what is the kind of impact that it has on the business. And we don't think that there is a lot of wiggle room for people to go much, much deeper than what they are currently going because that would balloon losses fairly significantly. So that's what we mean by it is fairly predictable now.
Interesting. Got it. And the second part also, if you can elaborate on this, you mentioned pricing-led growth requires sustained cash burn and leads to systemic trap they can't easily walk out of. Can you just elaborate on this piece also?
See, we are fundamentally a supply-creation business. And if you calling your supply towards providing discounts to customers, then that's what the business becomes. Every time you want to pull away from that, there is nothing else to offer to the customers because that's what you got to the customers in the first place for. So there is no pullback in this -- like we also explained that there's no pullback that you'll pull the discounts and the customers will stay because you've got the customers by promising them a subsidy. And then we'll move to move to the next platform or the next platform or they will drop out of the category. So we don't see a recovery for platforms from this trap if they are acquiring customers by giving a lot of subsidies. There is no path to recovery of saying that they'll be able to retain those customers when they pull back the subsidiaries.
And Vivek, just to add, like I think this is also coming from our own experience in the past. I think like couple of years ago, when you were building out this business, we were in many cities, major cities, #3 or 4 players, right? And our initial approach in those markets like typical e-commerce thinking is that, let's start discounting and get customers and over time, the investment will pay off, right? And that didn't work for us initially in markets, some markets in the south, right? So eventually, what worked was working on the infrastructure growth, which Albinder mentioned. And we have the outcomes in front of us. Now we are the leading player by NOV in most of these markets, right? So we strongly feel that discount-led growth is not sustainable in the business. And that is what has become predictable. And so we are able to more confidently plan our next few quarters on what we need to do.
Got it. And just last one on the same point, you already have a number of MTU, which is comfortably over 30 million. Let's say, if you have to -- I'm sure the industry is growing so rapidly. If you have to double this number for, let's say, 30 -- plus 30, do you think with the current strategy not discounting at the time where the intensity is very high in the market, the service quality will still be -- and whatever you stand for will still be able to allow you to do that? Or there will be a cohort of customers which will be price sensitive, and therefore, getting incremental customer from this stage will require more probably discounting on your part?
Vivek, our strategy in these things is that it's not like we don't give customers value as well. As a platform has gotten bigger, our profitability has gotten better. There is a certain amount that we keep reinvesting back into making our product prices more competitive, giving customers actual value, which allows us to also then be able to tap into deeper customer cohorts, which might be more price sensitive than the current ones that we currently have. So that process will continue. But that's a gradual process, whereas the platform gets bigger, we pass on more benefits to the customers. it allows us to tap into a larger market. And I think that is where the additional MTUs will come from as well.
And also, we work like we don't think this level of discounting is sustainable, as we said, right? So we expect this do not continue beyond the near future, right? So we do think that this will come off. And therefore, the pressure on us needing to discount as to maintain competitiveness and price will go down, right? Even with that, the prices can come off at scale, but that's then a choice that we make to pass on the benefits of scale to customers rather than actually trying to compete with price on someone else.
Next question is from the line of Aditya Soman from CLSA.
Sir, two questions. Firstly, on Blinkit, we saw a lower AOV now for 2 quarters in a row. While we've seen very strong order growth. Can you just explain what led to this drop in AOV? Last quarter, I understand there was an element of seasonality, but we've seen it drop a little bit more. And just maybe related to that, with sort of the delayed monsoon, what has been the impact, if at all, on the business or any changes in the mix or anything of that sort? And secondly, on food delivery. Now the absolute number of monthly transaction customers you're adding is actually increasing every quarter. Now is this a function of sort of new customers coming to the fold or just a faster conversion from the ATUs? And also any sense on frequency or in food delivery?
[indiscernible], the Blinkit drop is still sort of in the same range as we were last year. But most of the drop is usually just related to small changes in the patents that happened during the quarter. So overall, in terms of the throughput and the category shares, nothing has materially moved to change the AOV, right? Some of it is also can just be related to lower product prices because there is a lot of competitive intensity, which also forces us to price match and a lot of things. So those can also have an impact on lowering AOV.
And generally, Aditya, we're not expecting the AOV to grow from here, right? So if you look at year-on-year, it's flat, right? So that accounts for seasonality for Q1, right? And we expect broadly AOVs to remain in the same range, right? So in Q3, they might climb up again because of seasonality, but broadly ballpark, we don't think they should move up in a meaningful way.
Understand. So the right way then to understand this is the focus remains on sort of order growth and maintaining over at the current level, which is already profitable?
Yes. I mean, is more an outcome, right? We don't drive that. I think the mix of the categories and the products and assortment that we have leads to that AOV, right? Eventually, what is important is the NOV in the business and the margins, right? So as long as they move in the right direction, we don't worry too much about AOV because there could be smaller categories or products which are high margin and vice versa, right? So beyond a point, AOV doesn't take the margin structure too much from hereon.
No, very clear. And the food derivatives?
Yes. On food delivery, I think the increase in MTUs is a combination of both addition of new users. I think we've seen acceleration in new users that we've added to our platform in the last 3 or 4 quarters. So the category is growing as well as it's a function of more customers transacting more frequently. So both of them are playing a part in the growth in MPUs which you are seeing, which is driving growth.
Very clear. And just to be clear, this is -- this does not include Bistro, right?
No, there is no Bistro overlap in our disclosures, right? So neither in NOV nor in the bottom line, clearly segregated. It's also -- the Bistro business is also in a separate entity. So I think the segregation of accounts is very, very clear, and there's no overlap in this food delivery business.
Perfect. Very clear. And then maybe lastly, since we're on Bistro just to -- if you can give a sense of how many kitchens you have now and what's the current state of the business is?
Yes. So I think broadly, we are adding about 10-odd kitchens in a quarter, that's a pace of expansion there, right? So what is encouraging is in some of our older kitchens, we are seeing a lot of progress in throughput, and we feel like we're getting the mix of right assortment, menus, menu pricing and operational infrastructure and efficiency right, right? So I think as we iterate and make that better, we will see the business becoming more profitable. right? And we can be then more aggressive on expansion as we build that confidence. So it's the same mindset we had while we built out Blinkit that you get things right, basic processes which you know, it to be fixed. And as you do that, that allows us and gives us more room to more aggressively expand in the future. So I think we'll be cautiously expanding for now, but at some point that it can accelerate once we -- once we are more confident about the business.
Next question is from the line of Swapnil Potdukhe from JM Financial.
My first question is on Blinkit. See, you mentioned last quarter that there will be some bit of seasonality in the Blinkit business, and that will help you grow meaningfully faster and you did deliver 21% Q-on-Q volume growth. Now my -- I was looking at your historical data as well. It seems that between 1Q and 2Q, typically grow between 18% to 20% in volume terms. In fact, last year, you grew 26%. So will it be fair to say that we should be looking at a similar kind of a growth in 2Q as well and broadly in line with the historical range, if not more?
Sorry, Swapnil, we don't want to comment on the quarter right now, no guidance on that.
No. Okay. The second question is with respect to your take-rates in the business, Blinkit business again. You are seeing some decent improvement in the take rates, but that doesn't seem to be flowing down to your contribution margin. Now is there any particular reason that is hurting you here? Because ideally, a decent proportion of your take rate increase should flow down to your contribution margin, right?
There was some increase in the cost of doing business in the quarter because there were a lot of states which implemented increase in minimum wage. So that was one factor. And also we are also opening our larger stores. So some of that contribution also comes from. Earlier stages of these stores, the contribution is lower than when we open smaller stores.
Yes. Again, Swapnil, it's a seasonal business. So in Q1, the last mile costs are also usually higher, right, because of summer and heat and various other factors. So if you look at year-on-year, you see that a large part of gross profit increase or take rate increase has translated into contribution increase, right? So on a more, I think, longer term, the right metric to compare with this Q1 of previous year, and it could be different for quarter-to-quarter depending on seasonality, the margin could be higher because of mix change also, right? So those things are also in addition to what Albinder said, I would like to note.
Got it. The other question is with respect to your CapEx guidance that you have said, you say per store basis, one should look at around INR 2.5 crores of CapEx. You added around 200 stores this quarter, but your CapEx was INR 700 crores. I mean there is a meaningful difference between what you are suggesting as typical CapEx versus what is there in the balance sheet -- your cash flow statement. So can you just help us in...
I think we should look at this somewhat more longer-term sorting because I think there is a lumpiness in investment here because while we are presenting the information as CapEx per store, but part of the CapEx -- a large part of the CapEx is in warehousing, right? And that investment is lumpy. So if you will, therefore, look at last 6 months, 9 months or longer term, our CapEx and look at the CapEx per store for that period, you will find it is lower than INR 2.5 crores, right? So we expect, therefore, that to continue going forward.
And just a last one on your NOV retention data that you mentioned that over a 3-year period, typically a cohort of customers say 3x increase. Now when you give this data, this data is for only those customers who you have retained? Or this is also for -- includes customers who may have left the platform and never come back after 3 years?
Yes, it's for the overall cohort, right? So if you are acquiring 100 customers in the quarter, the percentages are for the entire 100, right? So if 40 of them never show up again, then the retention is only 60%...
And despite that, you will have 3x increase is what you are suggesting?
Yes. So for the cohort that has remained, therefore, the growth is much higher, right? But at the full cohort level, the numbers are what we have presented here.
Next question is from the line of Jignanshu Gor from Bernstein. Seems like we're facing some technical difficulties. We'll move on to our next caller. Next line of question is from Vijit Jain from Citigroup.
Congratulations on a great set of numbers. My first question, so you mentioned you plan to add gourmet stores in these Tier 1 cities, right, as you focus on assortment in these cities. So does that mean split orders in metro cities in the future? Or are you thinking of these stores as generally housing more expensive assortment but housing everything? That's my first question.
It's a combination of both, Vijit. It depends on the kind of real estate that we get, infrastructure requirements. So if we are able to fulfill it within the same stores, like I said, we are opening larger stores, so we have the ability as well within some stores.
Got it. And so is it -- you will -- is there any consideration that split orders is not a good user experience? Is that the case at all? Or in your experience that has not really been a factor at all?
Yes. As a platform, we do want to make sure that we're not tilting too much towards split orders. customer experience would be not as great. But so far, we have not experienced that in practicality. I think customers value the availability of products more than the split orders.
Understood. My second question is, in that comment on competition, I know one of the previous callers already talked about it a little. But you also said that discounting, you believe is even less effective in quick commerce and e-commerce. And I wanted to just double check. You say that because the quick commerce is a higher frequency engagement and that habit formation and expectation of discounting becomes more entrenched here. Is that why you're seeing that? Or is there more to it?
No. So I think the difference is, I think, on the real estate available, right? Quick commerce, you're working off smaller store sizes, right? So you have a limited shelf space, right? So if you are discounting in categories where the margins are low and to discount on them, then that's all that sells from that store, right? And you don't have to actually really increase assortment or even if you increase assortment, the reliability of that availability is not there for the customers, right? So I think that's the fundamental difference. In e-commerce, you have like large warehouses, right? You could deliver -- you get more customers looking for grocery items that are highly discounted. Theoretically, you can still offer and fulfill wider assortment, right? Here, that you're working, the constraint is the store size. And that's why I think it's different in the case of e-commerce.
Got it. Understand. One last question. So that comment on EBIT margin of 4% and adjusted EBITDA margin of close to 6%, I want to be just clear because you say EBIT margin of 4%, not adjusted EBIT, so are you including ESOP expenses when you say EBIT margin of 4% or are you including something else?
Yes. So there is [ ESOP ] expenses and there is a depreciation, right? So we are accounting for both of them.
And then you get to a GAAP EBITDA margin -- EBIT margin of 4% as long term?
Right.
Understood. and if I can just squeeze in one last question on inventory losses. You say that it's about 1.8% of NOV and largely driven by perishables. Practically speaking, does this go down from 1.8% or it's a harder problem to solve, aside from, of course, the mix changing?
It has been fairly emphatic so far. So we don't expect it to be materially much better. .
Got it. And do you net it at the gross profit level?
That's right. That's what you mentioned also in the letter that -- last line of question 6 that we all the losses are netted out from gross profit from -- I mean, the part of COGS in a way, right? So gross profit is net of net losses.
Next question is from the line of Yogesh Aggarwal from HSBC.
Just a couple of questions. Firstly, can you provide some color on the growth differential across bigger cities and the smaller towns in Blinkit?
Yogesh, obviously, the non-metro cities are obviously growing faster because they're also growing off a smaller base. The percentage growth rates obviously will look much higher over there. And also whatever competitive intensity we see, we see mostly starting off within grocery in the top-tier cities. So there is some impact of that over there. Although we are still seeing robust growth in our Tier 1 cities, we think there is some share shift also which happens over there, which lowers the number that we end up seeing.
Right, right. And just the other one, based on the new economics for the stores, I think now since they are bigger stores, you're looking at 2,100, 2,200 [ OPD ] per store per day. Is there a possibility to modify the existing stores for them also to do 20 -- similar level of throughput going forward? Or we are close to peak there in terms of size and throughput?
No [Audio Gap] as a regular exercise. So we've been upgrading a lot of the existing stores also to find more optimal properties, which are larger and move largest [ stores ] side.
Next question is from the line of Ankur Rudra from JPMorgan.
Looks like a nice growth recovery. Do you think you're back to regaining share in the market? Or is the industry growth [ vis-a-vis ] better than expected in the quarter?
I mean, like we don't know like it's speculative, Ankur. So I think we are more focused on what we can rely on is our data. So as we mentioned, like for us, the tracker is with customer retention, which I think is better than what it has been. So from our vantage point, therefore, if the market is expanding faster than us really doesn't matter towers. .
Got it. Just in response to Vivek's question, you had mentioned that you're looking -- you have been passing on some benefit of scale as value to customers. How do you distinguish between giving customers value versus discounting you see from your peers?
We usually don't look at whatever discounting is happening from the peers beyond a certain point. Our baseline is usually what we think product prices can be sustainable in the long run, and that is sort of what we index towards. And the idea is that if our business is generating more efficiency and we can actually lower those prices even further, that is when we actually take those price decreases. But we want to sustainably stay at those prices for the foreseeable future, we usually don't discount for a shorter period of time just to get some customers.
Got it. Got it. Just a follow-up. It was a nice surprise to see a very nice sharp increase in MTUs and quick commerce despite a lower spend in marketing and fewer store adds. Is there anything you did differently this time to increase the MTU addition?
Not really.
Okay. Just last question on food delivery then. Can you elaborate how you have responded to toying and only given you have accelerated this quarter? And does it appear like there's been any share loss despite lower customer fees from these formats?
No. I think so as we have mentioned also, Ankur, the question response to question 3, that we're trying to be price competitive in certain markets where these platforms are more aggressively spending, right? So, so far, that's been enough to be able to make sure we are able to defend and not lose share to these platforms. One of the bits that we did was actually last year when we dropped the eligibility for free delivery for a gold member to of INR 99 instead of 199. So that's one example of how that reduces the cost for a customer, which is seeking a low-value order.
Next question is from the line of Abhisek Banerjee from ICICI.
Just on CapEx per store [ bid ], so you have given INR 2.5 crores earlier. So is that INR 1 crore should be comparable in terms of which -- did you use to include warehouse [indiscernible] also in [indiscernible] or not?
That's right.
Okay. In the -- on the net working capital side, right, so you have actually may reduce it to 12 days, right? But when you are actually going to [ increase ] the [ inventory ]? I think the thought process was that if you increase your assortment, it can actually increase from that 18 days number. So what has kind of helped you reduce it further? Is it just [ storms ] of trade or something else?
So I think, see, 12 days is what we are saying here is like a steady-state estimate right now. Currently, as we have mentioned in question 5, we are at 14 days, right? So what has changed, like what has helped us reduce it from 18 to 14 and what we think will take you to 12% further is largely, I think, on account of lower inventory days than what we initially thought we need to carry, right? So that I think -- as we've -- the replenishment and the throughput from the stores and the supply chain has been able to like -- we'll be able to achieve a lower inventory days number in the business. And I think that's been the main driver of this production.
Understood. And with regards to your [ OCF ], there is a tax reversal which is com in, which is why the [ OCF ] number is higher this quarter. Is that kind of a sustainable level going forward? And also if you could give some color on the taxation, that would be helpful.
So Abhisek, this is Kunal here. So this -- the tax refund was on account of a refund because there were certain expenses which were ambiguous on whether they'll be allowable. So we had deposited higher advance tax and there's a refund towards that. So that's normal course of business, I think such things may come up once in a while going forward as well, but nothing structural.
Could you also give some color on the [indiscernible] business? And exactly what is it that you're doing there on that?
So Abhisek, I think we'll share more about it in the coming quarters. I think we are still, in some ways, in a little bit of stealth mode here, right? So it's an enterprise AI product and business. And I think we are seeing good traction in that. But it's an evolving market, as you know, right, the entire AI space. So I think we want to take a couple of more quarters and build our thesis more strongly around this, and then we'll share more about this business going forward.
But when you're seeing expenses, is it -- because your losses have increased there. So is it on manpower or is it for buying GPUs and stuff like that? So if you could just give some color on that.
Largely manpower.
And one question, is not really a quarter question, but since you've already spoken about how there's no point getting users beyond a certain number of MTU, right? So do you -- could you give some color on what is the [ comparative ] ratio in Q3? You already know that it's very steep for delivery. But in Q3, it is steeper than that? Or how does it kind of look, if you can give some color?
I didn't understand your question.
So food delivery, right, maybe your top 15% to 18% customers already drive 80% of revenues. So how does that ratio kind of apply in [ Q3 ], if you could give some color on that?
Much flatter than that.
Next question is from the line of Manish Adukia from Goldman.
My question actually is a follow-up on what was discussed earlier. Now, Akshant, you say that your AOV should remain range bound in the foreseeable future and when you also talked about the cohort data earlier, you said that large out of that expansion was a function of frequency and not necessarily AOV. I'm just trying to reconcile that with, one, your assortment expansion over a period of time where non-grocery has continued to expand from an assortment perspective, we are already talking about Gourmet as also an added focus area from an assortment perspective. So when I think about MTU expansion in the near term, I understand why average EVs may not expand. But over a period of time, if I look at today, your basket size, you're probably MTUs are spending less than INR 2,000 per month on your platform. why should that number not be substantially higher in 2 to 3 years from now as MTU growth maybe start slowing down at some point in time, if you can just help maybe explain that a little bit better, that would be great.
Manish, I think the wallet share will increase, right? So we are not saying a customer will spend the same amount of money, right? So there's a distinction between wallet share and right? So when we say AOV are unlikely to increase despite assortment expansion, I think what we are saying is a lot of assortment that we are adding is also low-AOV assortment, right? So there is that element which you have to acknowledge. Also, I think as frequency of consumers go up on our platform, we see that they really start ordering fewer items in a cart, right, because it becomes a daily use case. And as customers, we have seen for ourselves that the order sizes need not be 400, 500 for every order as you become a more frequent customer. So there is like, therefore, a drag on AOV from both these sides where as frequency goes up, we see the AOV flattening out. And also the assortment expansion in many of the general merchandise category is actually small, but the margin is higher, right? So that doesn't hurt us. So net-net, therefore, while there will be an inflationary pull on AOV, there'll also be a pull on AOV expansion because of some assortment that is higher AOV. But as a combination of all of these factors at this point, we feel that that's not something AOV expansion is not something that we see happening at this point.
Very clear. My second question was, again, maybe a follow-on to one of the previous questions. Now when you look at say, your CapEx per store assumption where you have now increased that by 150% versus where you had earlier, but your NOV per day per store assumption is only up by 60%. How do I reconcile the difference between these two numbers? Like why should NOV per store only grow by 60%, and you were talking about CapEx expansion of 150% versus previous assumption?
Manish, the CapEx expansion has a lot to do with the overall supply chain and not just the store itself. So the efficiency of the supply chain goes up because we are able to store more products in a single warehouse. We have pure requirement and if we are able to do more CapEx and put more products in the same store, same warehouse, ship them more efficiently. So that is why we are doing that CapEx. But the correlation to how it goes to like just -- it is not only correlated to the store throughput.
Another think about this, Manish, is that like -- I mean, like you see higher CapEx with lower NOV growth can be explained if we are expanding the market, right? So I think what we are solving -- following here is actually trying to expand the market while making sure the ROCE is healthy, right? So when we -- like for example, opening stores in smaller cities could lead to a lower NOV per day per store, right? But if that still profitable at 6% margin, then that increases the top line for us, right? So that's the whole point. I think the spirit on this topic is that, look, we are open with these numbers moving around, right, the CapEx per store, the net working capital or NOV per day per store, even the margins EBITDA and EBIT margins, as long as the math on ROCE is stacking up well, right? The more we invest, even if the margins fall, for example, but if the ROCE remains high, is still -- the absolute dollar of profit on the business will be more, right? So that's how I think I would look at it.
Very clear. My just last question is on margin. Now given that you mentioned that competition is becoming -- or become more predictable, so you're not seeing any material pressures of that or your margin is going to expand despite that. And you also called out that June was probably at least closer to peak, if not the peak of competition. So is it safe to say that as long as growth in the business continues as per your expectations, which you said should be robust, there is no -- there are no near-term pressures on margins that we should anticipate. And directionally, margin should continue to improve? Is that like a fair conclusion?
I think so. I think at this point, we can say that.
Next question is from the line of Garima Mishra from Kotak.
I had a couple of questions on District. So you mentioned in the letter the District is operating across 5 categories. I presume out of those 5, dine-out and movies are the largest revenue contributors. Is that correct? And what traction are you seeing for the new categories let's say, events, activity outlets, et cetera?
Yes, Garima, that's broadly correct. So today, dining out and movies are the bigger categories. And amongst the newer ones, I think retail stores and events could be the more promising ones, but we are still early in that journey. We're seeing good traction. I think at this point, the idea is to figure out how much value we are able to add to the supply ecosystem and also from a customer experience standpoint, kind of work on areas that improve customer experience. So I think that's the journey we are on the other categories. So [indiscernible] to say how they'll kind of what kind of trajectory of growth we'll be able to see. But as of now, things are promising.
Second, in terms of users, how would the MTU base of District compare with, let's say, that of the food delivery business? And should we assume that District is present in as many cities as let's say, the dine-out or food delivery business is present in?
So Garima, like we pointed out in the past as well, for the going-out business, I think we certainly think of the customer base is slightly different from the food delivery business and a base that is able to spend more, and that's also reflected in the AOVs that we see in District. So I think we wouldn't compare it, but we think there's still enough room to grow even at this NOE base for District.
It's definitely a smaller customer base, Garima, for going out compared to food or quick commerce. And the number of cities that we will do this business will also be much smaller than the other two businesses.
Understood. Thank you. Ladies and gentlemen, in the interest of time, we will now take the last one to two questions. Next question is from the line of Aditya Suresh from Macquarie.
So two questions. So first is on the productivity gains which you have seen in the past, say, 2 quarters. Can you maybe just talk through that a little bit on how you see that trending in the next few quarters or maybe on a say, 2-, 3-year basis? That's the first one. And the second is, Akshant, as the business stands today, if you were to kind of measure or calculate what would that be like?
So I think right now, of course, the EBIT margin is negative. So there is no ROCE. So we are all talking about future here. It's a business and industry which is in the making right now. So we're trying to invest. I mean, the framework we've given for ROCE is a framework for us to think about on how much to invest in the business, right? So as of today, given the margin of the business, negative, there's no ROCE. And I hope that answers your question. On your first question, can you be more specific? I mean it's a very generic question, like so...
You have seen productivity gains at dark store level in the past few quarters, whether it be on a per order basis order NOV basis. Could you maybe just talk through beyond just cohorts maturing? Is there any other dynamics which are at play, which is driving this improvement? .
It's everything. I think not just last few quarters, we have seen the productivity improving since the time we started the business. right? So the productivity gains are at the dark store level, at the warehouse level, supply chain, even our marketing is getting more efficient, right, assortment. So I think it's everything the business is about. So yes, so again, not sure like if you have a specific question here, but otherwise, the answer is what I just said.
Next question is from the line of Ashwin Mehta from AMBIT.
Yes. So just two questions. One, in terms of payables, there seems to be a material increase of almost INR [ 1,650 ] crores this quarter, so what exactly is driving that? And secondly, a broader view in terms of are we getting better terms from brands, et cetera, in terms of payables? And the second one was in terms of food delivery, where the restaurant count this quarter seems to have gone down. So is there some rationalization at play? How are we seeing additions there?
On the first question, the able include both trade payables as well as expense payables. So trade payable has increased because of the increase in the scale of the business, right? At this point, we are not necessarily trying to overoptimize on terms with the brands. So it's really more driven by scale. And then expense tables keeps fluctuating. I mean [indiscernible].
Yes, there's nothing to highlight on payables. Payables are fairly unexpected lines. And on the second question, Ashwin, I think it's a little bit of impact of the LPG situation in the country in the last quarter because of some restaurants -- because of which some restaurants went offline. So I think that's why probably you see a slight dip in the monthly active restaurant bars.
Thank you. Ladies and gentlemen, we will now conclude this conference call. Thank you for joining us, and you may now disconnect your lines.
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