HDFC Securities has upgraded Eternal to a buy rating while holding its target price at Rs 340, implying over 48% upside from the current market price of Rs 229. This move reflects analysts' rising confidence in the company's execution within India's digital consumption space, spanning food delivery, quick commerce, and new verticals. Investors now eye Eternal's shift toward sustained profitability amid robust user growth and infrastructure expansion.
Strong Execution Drives Multi-Vertical Momentum
Eternal distinguishes itself through dominant performance in food delivery and quick commerce, particularly via Blinkit, outpacing rivals hampered by unit economics challenges. Food delivery anticipates 20% year-on-year monthly transacting user growth, 24% order volume increase, and 18% net order value rise, bolstered by initiatives like the Gold membership program that lift user engagement. Quick commerce benefits from supply chain strengths, with 250 new dark stores projected to spur 10% quarter-on-quarter net order value growth and average daily throughput per store at Rs 834,000.
Financial Projections Signal Profitability Shift
Adjusted EBITDA margins expand from 2.0% in FY26E to 3.2% in FY28E, fueled by operating leverage and cost controls, as revenue climbs from Rs 545,603 million to Rs 1,181,771 million over the same period.
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue (Rs mn) | 5,45,603 | 8,85,305 | 11,81,771 |
| Adj. EBITDA (Rs mn) | 10,913 | 24,777 | 37,230 |
| Adj. EBITDAM (%) | 2.0% | 2.8% | 3.2% |
| EPS (Rs) | 0.3 | 1.3 | 2.2 |
A sum-of-the-parts valuation assigns Rs 134 to food delivery at 45x FY28 EV/EBITDA, Rs 166 to quick commerce at 1.5x FY28 net order value, Rs 18 to going-out at 1.0x gross order value, and Rs 4 to Hyperpure and others, totaling Rs 340 per share. Blinkit nears adjusted EBITDA breakeven, while the going-out segment, with losses moderating after Rs 1.2 billion in Q3, holds potential for USD 3 billion net order value at 5% margins by FY30—value not yet reflected in pricing.
Risks Temper Near-Term Outlook, Strategy Favors Dips
Near-term pressures include fulfillment costs from wider delivery radii and LPG shortages constraining menus, offset partly by 17-19% platform fee increases and higher minimum orders. Competitive pressures in quick commerce and execution demands in going-out persist as risks. Support lies at Rs 210-200, resistance at Rs 260-300; analysts recommend accumulating on dips for medium- to long-term horizons of 12-24 months, capitalizing on India's consumption boom and Eternal's infrastructure edge.
