Should Info Edge continue to hold on to Zomato and Policybazaar?

Imagine you own a small lemonade stand. The lemonade stand makes good money every year. That’s Naukri.com, 99acres, and Jeevansathi for Info Edge. These are core operating businesses of Info Edge.

Now, years ago, you used some of that lemonade money to buy small pieces of two tiny businesses started by your friends. One friend started a food-delivery company, Zomato (parent company Eternal), while another started an insurance marketplace, Policybazaar (parent company PB Fintech).

Back then, those businesses were tiny and risky. Most people thought they might fail. Instead, they became huge. These investments have since evolved into two of Info Edge’s most valuable listed holdings.

Let’s say you spent Rs 100 to buy those pieces. Today those pieces are worth Rs 3,000.

Now people are asking, “Should you sell them and take the money?”

That’s the whole debate.

Why keep holding them?

According to ICICI Securities, Eternal and PB Fintech have emerged as big bets.

While Eternal’s core food-delivery business continues to grow, the market’s attention has increasingly shifted to Blinkit. Food delivery has become a relatively mature business, generating cash and demonstrating profitability.

Management repeatedly emphasised sustainable growth, profitability, customer retention, and pricing discipline rather than headline GMV growth.

“Quality growth, which meaningfully also takes the business towards profitability and sustainability, that is the only non-negotiable,” says CEO Albinder Dhindsa.

Eternal’s Q4 FY26 results show that the company’s consolidated net profit soared 346% YoY to Rs 174 crore, compared with Rs 39 crore in the same quarter last year. On a sequential basis, net profit rose 70.6% from Rs 102 crore in the December quarter.

Blinkit, meanwhile, represents a much larger strategic opportunity. Quick commerce addresses a genuine consumer need: convenience and time savings, and has emerged as one of the fastest-growing segments of India’s internet economy.

To understand why investors remain optimistic, it is worth looking at what numbers say about Eternal’s recent performance.

Most internet companies avoid long-term forecasts. Eternal did the opposite. Management has publicly guided for Blinkit to compound at over 60% annually and generate roughly $1 billion in EBITDA by FY29.

Eternal now has nearly Rs 18,000 crore in cash. Many quick-commerce companies globally failed because they ran out of capital.

Blinkit is being expanded from a position of financial strength. For Info Edge, this reduces downside risk considerably.

For investors, the key question is no longer whether Indians will order food online, but whether quick commerce can become a large, profitable retail channel.

If Blinkit succeeds in building a sustainable economic model, it could significantly expand Eternal’s addressable market and justify a higher valuation multiple.

A similar argument can be made for Policybazaar. India’s insurance penetration remains low compared with many developed economies; while rising incomes, urbanisation and greater financial awareness are expanding the potential customer base.

If millions of Indians purchase health, life and motor insurance for the first time over the next two decades, Policybazaar is well positioned to benefit as one of the country’s largest digital insurance distribution platforms.

The insurance sector may also benefit from recent policy reforms. The government’s decision to permit up to 100% foreign direct investment in insurance could attract additional capital, expertise and competition into the industry.

Policybazaar also delivered strong financial results in Q4 of FY26, posting a 54% YoY increase in net profit to Rs 261.2 crore and a 37% YoY increase in operating revenue to Rs 2,061 crore. This performance highlights the company’s growing operating leverage and profitability.

Policybazaar says it contributed 40% of all new retail health-insurance customers added in FY26.

The company also claims that its market share has increased from 4.5% to 18–20% since its IPO. Its health-insurance business grew 68% in FY26, more than three times the industry’s growth rate.

Supporters of holding argue that selling today could mean missing substantial future value creation if these businesses continue to compound.

Why sell them?

In 2010, Info Edge wrote a cheque to a little-known startup called Foodiebay. Fifteen years later, that investment alone is worth more than a third of Info Edge’s own market value.

They are now so valuable that Info Edge’s future depends heavily on them. Imagine your net worth is Rs 100. Suddenly Rs 70 comes from just two stocks.

Now, if one stock falls 30%, your wealth drops a lot. That’s concentration risk.

This is why some investors say, “Take some money off the table.”

Jefferies India has frequently pointed out that Info Edge suffers from a severe holding company overhang.

Kotak Institutional Equities has raised questions during earnings calls regarding Info Edge’s cash deployment strategies.

Sell a little, keep a little. Don’t let your fate depend too much on two companies.

Their concern is not that Eternal or Policybazaar are poor businesses. Rather, it is that no matter how strong a company appears, shareholders become vulnerable when too much value is concentrated in a handful of assets.

Prosus has held its stake in Tencent for decades, but it periodically sells a portion of its holdings to reduce excessive portfolio concentration.

What are the biggest risks?

While the growth and profitability metrics of Eternal and Policybazaar paint an attractive picture, investors must evaluate whether these gains are durable or not.

For Zomato:

Much of Zomato’s future valuation depends on Blinkit. The challenge is that Blinkit operates in an increasingly crowded market alongside competitors such as Zepto, Swiggy Instamart and potentially larger players like Amazon. Sustained competition could pressure margins and force continued investment.

Quick commerce is growing rapidly, but the industry is still proving its economics. Investors must determine whether current growth can eventually translate into durable profits or whether the sector remains dependent on continuous spending and discounts.

Food delivery and instant commerce are partly discretionary purchases. During periods of weaker economic growth, consumers may reduce spending frequency, affecting order volumes and profitability.

Artificial intelligence and changing consumer behaviour could reshape digital commerce. If shopping increasingly moves to AI-powered assistants or new platforms, today’s advantages may not remain permanent.

For Policybazaar:

Insurance is a highly regulated industry. Changes in commissions, distribution rules or consumer-protection regulations could affect profitability.

Insurers may invest more heavily in direct-to-consumer channels, reducing dependence on aggregators such as Policybazaar.

As AI tools become better at comparing financial products, the value provided by comparison platforms could face pressure unless they continue to innovate.

The bullish case assumes millions of Indians buy insurance for the first time. If insurance penetration grows more slowly than expected, revenue growth could disappoint.

None of these risks is an immediate disaster. But they exist.

Concentration risk for Info Edge:

Eternal alone now represents a substantial share of Info Edge’s market value. As a result, the company’s fortunes are increasingly tied to the performance of a business it does not control operationally. A strong quarter at Eternal can create billions of rupees in value for Info Edge shareholders. A weak quarter can have the opposite effect.

Info Edge is approaching a strategic inflection point. As the value of its stakes in Eternal and PB Fintech rises, investors are increasingly evaluating the company not merely as the owner of Naukri, but as a listed technology holding company.

The shift matters because once a portfolio becomes large enough, the central valuation question changes from ‘How fast can Naukri grow?’ to ‘How should management allocate capital across its investment empire?

So, should Info Edge hold or sell?

Imagine you planted two mango trees. For years they gave you nothing. Now they have finally started producing mangoes.

Selling the trees today would give you a lot of money. Keeping them might give you even more mangoes for many years.

The sensible thing is probably not to chop down the trees. Maybe sell a few baskets of mangoes occasionally. But keep the trees.

That is essentially the argument for Info Edge to continue owning large stakes in Zomato and Policybazaar. The biggest money is often made not by finding great businesses, but by having the patience to keep them once you already have them.

Warren Buffett rarely sells great businesses simply because they have appreciated. He sells when fundamentals deteriorate, and opportunity cost becomes overwhelming.

As of March 31, 2025, Info Edge’s investments in Zomato and PB Fintech are valued at Rs 31,500 crore against an investment of Rs 1,075 crore.

However, in FY26, the intense market contraction erased a massive chunk of the multi-billion peak valuation it had achieved in 2025 (when Zomato stock crossed Rs 311 per share).

In Q4 of FY26 alone, Info Edge recorded a combined unrealised mark-to-market loss of over Rs 8,161 crore across both holdings due to a sharp tech sector cooling and stock price corrections.

Despite a correction, Info Edge’s long-term bet on Zomato remains wildly profitable.

These figures illustrate the scale of value creation. It turns the debate from “Was the investment successful?” to “Should Info Edge continue compounding this success?”

“We are not standard VCs with an 8-year fund lifecycle. We are long-term builders. If you have a generational winner like Zomato, selling it early to diversify just cuts your compounding short,” said Sanjeev Bikhchandani (Founder) and Hitesh Oberoi (CEO).

According to Bikhchandani, startup investments made since 2007 have generated an estimated gross IRR of 36%.

In simple terms, Info Edge’s startup portfolio has compounded at about 36% per year since it began investing in startups in 2007.

It shows management increasingly views these investments as strategic assets rather than accidental windfalls.

The debate around Info Edge is no longer about whether Zomato and Policybazaar were successful investments. That question has been settled. The real question is whether the company’s next phase of value creation will come from continuing to hold them or from finding a way to unlock the value already created.