Brokerage house Emkay Global Financial Services has reaffirmed its bullish stance on Eternal (Zomato), setting a new target price of INR 430 per share, implying a 31.5% upside from the current market price of INR 327. The rating remains a firm BUY, driven by accelerating growth in the company’s Quick Commerce (QCom) vertical, led by Blinkit.
QCom Surges 137% YoY — A “Landgrab” Phase
Eternal’s latest quarterly results beat expectations on revenue, with robust expansion in the Quick Commerce business, which reported a 137% year-on-year NOV (Net Order Value) growth. This surge was underpinned by strong demand trends and the company’s shift to an owned-inventory model, allowing better control over delivery timelines and product availability.
However, Emkay noted that EBITDA margins in the QCom business came in below expectations, owing to higher marketing spends and faster-than-planned store network expansion. Eternal added 272 new Blinkit stores during the quarter, taking the total to 1,816 and revising its FY25 target to 2,100 stores (from 2,000 earlier). The company expects to reach 3,000 stores by March 2027.
“When the industry is in a ‘landgrab’ phase, the company should focus on market share rather than profitability,” Emkay analysts Pranav Kshatriya and Aryan Tripathi wrote. “Blinkit’s superior unit economics and strong balance sheet enable it to invest aggressively and gain share sustainably.”
Food Delivery Growth Slows, But Margins Strengthen
Eternal’s Food Delivery business saw muted NOV growth of 14% YoY, below its long-term aspiration of 20%. The softness was attributed to sluggish discretionary consumption, the cannibalizing effect of QCom growth, and weather-related disruptions.
Yet, profitability improved — EBITDA margin rose to 5.3% of NOV, up from 5.0% in Q1 FY26 — largely due to higher platform fees and cost efficiencies. Emkay expects food delivery to remain in a consolidation phase, where profitability takes precedence over volume growth.
Valuation Uplift: DCF-Based Target for Eternal Raised 48%
Emkay has increased its DCF-based target price by 48% to INR 430 (from INR 330 earlier), factoring in stronger QCom growth prospects and higher network scalability. The updated valuation composition is as follows:
| Business Segment | Valuation Method | Value | Value per Share (INR) |
|---|---|---|---|
| Food Delivery (incl. Hyperpure & Going-Out) | DCF | 99,500 | 103 |
| Quick Commerce (Blinkit) | DCF | 2,99,400 | 310 |
| Cash & Investments | Book Value | 18,700 | 19 |
| Total Equity Value | 4,17,500 | ₹ 433 |
Despite trading at expensive valuations (≈ 50× FY28E EV/EBITDA), Emkay believes Eternal’s execution strength, superior economics, and balance sheet health justify the premium.
Financial Snapshot: Blinkit Boosting Growth Engine
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue | 56,718.6 | 94,341.5 | 1,37,302.6 |
| EBITDA | 363.6 | 3,278.9 | 5,755.2 |
| EBITDA Margin (%) | 0.6 | 3.5 | 4.2 |
| Adjusted PAT | 262.3 | 2,138.9 | 4,041.2 |
| RoE (%) | 0.9 | 6.8 | 11.6 |
| EV/EBITDA (x) | 796.8 | 88.4 | 50.3 |
Emkay forecasts EBITDA to grow 9× by FY27, driven primarily by Blinkit’s scale benefits and improved operating leverage. RoE is expected to climb to 11.6% by FY28, signaling steady earnings normalization.
Market Performance
Eternal share price has gained ~27% over the past year and 33% in the last three months, outperforming the broader Nifty 50 by nearly 24%.
| Performance (% Change) | 1 Month | 3 Months | 12 Months |
|---|---|---|---|
| Eternal | 6.3 | 32.6 | 26.8 |
| Relative to Nifty 50 | 4.8 | 30.7 | 23.8 |
The recent rally reflects growing investor conviction in Blinkit’s turnaround and Eternal’s ability to sustain leadership in India’s hyper-growth quick-commerce space.
Analyst Verdict: Long-Term Winner in Quick Commerce
Emkay’s analysts reaffirm that Blinkit is structurally best placed to capture India’s quick-commerce opportunity, supported by execution consistency, unit economics, and financial muscle.
“While valuations remain rich, Eternal’s structural growth potential and improving operational metrics justify optimism,” the report concluded. “Blinkit’s growth strategy positions Eternal as one of the strongest contenders in India’s on-demand economy.”
Key Takeaways
- Eternal Share Price Target: INR 430
- CMP: INR 327
- Upside Potential: 31.5%
- Rating: BUY
- Key Driver: Blinkit’s 137% YoY QCom growth & market-share expansion
- Primary Risk: Near-term margin pressure from aggressive investments
- Outlook: Positive; Eternal remains a long-term compounder in quick commerce
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