HDFC Securities has upgraded Eternal to a buy rating while holding its target price at Rs 340, implying over 48% upside from the current price of Rs 229. This move highlights the company's strong execution in India's digital consumption space, spanning food delivery, quick commerce via Blinkit, and emerging verticals. Investors now eye Eternal's shift toward sustained profitability as a key draw in a competitive market.
Execution Strength Fuels Multi-Vertical Expansion
Eternal distinguishes itself through efficient scaling in food delivery and quick commerce, outpacing rivals amid India's booming digital economy. Initiatives like the Gold membership program boost monthly transacting users and order volumes, signaling renewed demand. Infrastructure buildout, including 250 new Blinkit dark stores, supports 10% quarter-on-quarter growth in net order value, with stores averaging Rs 834,000 daily.
Segment Performance Signals Profitability Shift
In food delivery, Eternal projects 20% year-on-year monthly transacting user growth, 24% order volume rise, and 18% net order value increase, despite LPG shortages and wider delivery radii. Platform fee hikes of 17-19% and higher minimum order thresholds counter fulfillment costs, stabilizing margins. Blinkit nears adjusted EBITDA breakeven, leveraging supply chain edges over competitors, while the going-out segment via District app shows user traction and moderating losses from Rs 1.2 billion in Q3.
Financial Projections and Valuation Back the Call
Analysts forecast revenue climbing to Rs 545,603 million in FY26E, Rs 885,305 million in FY27E, and Rs 1,181,771 million in FY28E, with adjusted EBITDA margins expanding from 2.0% to 3.2%. Earnings per share rise from Rs 0.3 to Rs 2.2 over the 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 NOV, Rs 18 to going-out at 1.0x GOV, and Rs 4 to Hyperpure and others, totaling Rs 340 per share. The going-out vertical, potentially a USD 3 billion NOV business with 5% margins by FY30, adds unpriced upside.
Risks Temper Near-Term Outlook, Long-Term Story Intact
Fulfillment cost rises from logistics complexity pose margin risks, alongside quick commerce competition and execution challenges in new areas. Support levels sit at Rs 210-200, resistance at Rs 260-300; analysts recommend accumulating on dips for 12-24 month horizons. Eternal's multi-engine model positions it for India's consumption boom, balancing growth with emerging profitability.
