Eternal Ltd. share price target

Eternal Limited is poised for long-term growth and improved profitability, driven by its strong market position and growth prospects in the quick commerce business (QCB). The company's focus on inventory ownership and margin improvement is expected to drive profitability. Although the industry outlook remains competitive, the company's strategy and long-term growth objectives, along with its strong management team, are expected to drive future growth. However, the stock's significant run-up in price and rich valuations limit the upside potential from current...

We believe competitive intensity is likely to see near-term volatility. Hence, we maintain our HOLD rating on the stock.

Blinkit’s adj. EBITDA margin (% of NOV) improved ~60bps QoQ in Q1FY26 despite adding 243 stores (ISec est.: 220) with steady take rate and contribution margin.

Eternal reported 1QFY26 revenue of INR72b, up 70% YoY, above our estimated growth of 62% YoY. Growth was led by Blinkit as its gross order value (GOV) increased 26% QoQ/140% YoY.

Exceeding estimates, Eternal’s Q4 saw strong execution in Blinkit, with the GOV growing ~20.8% q/q, 134% y/y, and the contribution margin expanding ~10bps q/q, which is encouraging, given heightened competition and aggressive dark store addition (~294 added; ~40% of the total 1,301 stores added in the last two quarters).

Adjusted EBITDA profitability in Q4FY25 was above our estimates (act. INR 0.7bn vs. est. INR 0.1bn). This was achieved by containing quick commerce (QC) losses despite adding 294 dark stores and 1mn sq.ft. warehousing space in a quarter with seasonally lower AOV (-5.9% QoQ).

Eternal delivered broadly inline operating performance in Q4. Revenue grew 7.9% QoQ, better than our estimate, led by Quick Commerce (QC) and Hyperpure. Food Delivery GOV saw a decline of 1.4% QoQ, due to persistent sluggishness in the demand environment, temporary shortage of delivery partners owing to high demand in QC, and increased competition from packaged food delivery in QC.

We believe near-term profitability is likely to impact margins owing to increased competition. Hence, we downgrade the stock to HOLD.

Eternal reported 4QFY25 revenues of INR58b, up 8% QoQ, in line with our estimate. Growth was led by Blinkit (GOV up 20% QoQ/134% YoY). The food delivery business delivered 16% YoY growth in GOV with a steady increase in margins.

We maintain our BUY rating on the stock.

Zomato reported 3QFY25 revenues of INR54b, up 13% QoQ, in line with our estimate of 14% QoQ growth. Growth was led by Blinkit (GOV up 27% QoQ/120% YoY).

Zomato logged a mixed performance in Q3FY25 – Revenue grew 12.6% QoQ, in line with our estimate, led by the Quick Commerce (QC), Hyperpure, and Going Out. Food Delivery growth was muted, with GOV growing only 2.3% QoQ, largely attributed to broad-based slowdown from mid Nov. Blinkit’s GOV surged 27.2% QoQ, continuing on the strong growth path.

In Q2FY25, Zomato sustained >20% YoY GOV growth in food delivery. Gross take rate declined 20bps QoQ. We believe this was due to higher proportion of ‘zero delivery fee’ orders.

we maintain our BUY rating on the stock.

Swiggy currently lags Zomato on key metrics, but its innovation DNA and possible improvement in execution could unlock massive value

Zomato has announced the acquisition of Paytm’s entertainment ticketing business for a cash consideration of ~Rs20.5bn.

Miniscule impact on overall numbers, but an important step toward capturing a higher wallet share from urban consumers.

Zomato achieved 9.8% QoQ in food delivery, ~3% ahead of I-Sec’s estimates and significantly higher than management’s guidance. More importantly, the commentary around ~30% GOV CAGR in food delivery.