Zomato’s parent company, Eternal Ltd., has announced a significant employee stock option (ESOP) grant worth nearly ₹211 crore, covering 64.13 lakh equity shares. The move underlines the company’s strategy to strengthen employee motivation and retention, even as it navigates through intense competition and shifting financial dynamics in the Indian foodtech market.
In this article, we will delve into Eternal Ltd.’s recent ₹211 crore ESOP grant, exploring the details of the allotment, its financial context, and the strategic significance of this move in India’s highly competitive foodtech market.
Image Credits: StartupTalky News
Breaking Down the ESOP Allotment
The newly approved ESOPs will be distributed under three separate schemes:
- Foodie Bay Employee Stock Option Plan 2014
- Zomato Employee Stock Option Plan 2021
- Zomato Employee Stock Option Plan 2024
Among these, the ESOP 2021 plan received the largest allocation, followed by ESOP 2024, while the 2014 scheme saw minimal grants. Each option has an exercise price of just ₹1 per share, making them highly attractive for employees as they can later be converted into fully paid equity shares.
With Eternal’s stock currently hovering around ₹330, the valuation of the newly granted options touches the ₹211 crore mark. This isn’t the first such reward in recent months—earlier this year, the company issued 10.13 lakh options under ESOP 2021, then valued at ₹33 crore.
Why ESOPs Matter in Today’s Market
In a sector where talent is a competitive advantage, ESOPs serve as more than just financial perks—they are retention tools. Startups and listed companies alike are under constant pressure to keep their best talent engaged, especially when rivals are aggressively hiring.
For Eternal, which is juggling rapid expansion with financial volatility, stock options offer employees a direct stake in the company’s growth. By aligning employee incentives with shareholder returns, the ESOPs reinforce a long-term partnership between the workforce and the organization.
The Financial Context
The ESOP announcement comes against the backdrop of Eternal’s mixed financial performance.
- Revenue Growth: In Q1 FY26, Eternal’s revenue from operations surged by a strong 70%, reaching ₹7,167 crore, compared to ₹4,206 crore in the same quarter of FY25.
- Profit Decline: Despite soaring revenues, profits fell sharply—down 90% to just ₹25 crore, versus ₹253 crore in the year-ago period.
The dip in profitability highlights the pressure of rising costs, marketing spends, and expansion-related investments. Yet, Eternal’s market valuation remains resilient, with its shares steady around ₹330 and a market capitalization exceeding ₹3.19 lakh crore.
Strategic Implications of the Move
The decision to reward employees with equity-based incentives reflects three key strategic goals for Eternal:
- Retention in a Competitive Landscape: With Swiggy, Blinkit, and quick-commerce players scaling aggressively, Eternal cannot afford a brain drain. ESOPs ensure employees see a future tied to the company’s success.
- Boosting Morale During Profit Pressure: Even as net profits shrink, offering equity grants signals confidence in the company’s long-term growth story. It reassures employees that short-term challenges will be outweighed by future value creation.
- Strengthening Employer Branding: In India’s bustling startup and corporate ecosystem, ESOPs have become a hallmark of progressive, employee-centric companies. Eternal’s latest grant reinforces its image as an employer willing to share the rewards of success.
Looking Ahead
Eternal’s move comes at a pivotal time when the Indian foodtech space is undergoing rapid transformation, shaped by consumer expectations, delivery innovation, and rising operational challenges. For Zomato and its parent, retaining top-tier talent will be crucial to maintaining a leadership edge.
While short-term profitability remains under strain, the ₹211 crore ESOP grant sends a powerful message—that Eternal is betting on its people as the cornerstone of its growth journey. In a sector where customer loyalty and operational efficiency go hand-in-hand, keeping the workforce motivated may just be the most valuable investment of all.
