Eternal Ltd., the parent company of food delivery giant Zomato and quick commerce platform Blinkit, has announced its fourth-quarter results, revealing a mixed performance. While the food delivery segment largely met expectations with steady growth and stable margins, the quick commerce business experienced a slight deceleration in its growth rate.
Eternal's Q4 Performance Highlights
The company's food delivery (FD) segment continued to be a strong anchor for profitability, maintaining a consistent 5% margin. Management indicated a focus on healthy and meaningful growth over aggressive, potentially unsustainable expansion. This strategic approach is aimed at ensuring long-term profitability and market stability.
Blinkit's Quick Commerce Expansion
Blinkit, Eternal's quick commerce arm, is undergoing rapid expansion into underpenetrated markets, alongside an increase in its product assortment. Despite this, the growth rate in quick commerce moderated during the quarter. Eternal's management projects an impressive above 60% net order value (NOV) CAGR ahead, anticipating more than fourfold growth over the next three years, with a gradual progression towards steady-state margins of 5%.
Analyst Outlook and Target Prices
Following the Q4 announcement, several institutional equities firms have updated their outlook and target prices for Eternal's stock, reflecting varying perspectives on the company's future trajectory, particularly concerning Blinkit's quick commerce segment.
Nomura India Adjusts Target
Nomura India revised its target price for Eternal downwards to Rs 340 from Rs 380. This adjustment primarily factors in a slower net order value (NOV) growth rate within the quick commerce business. The brokerage highlighted the risk of lower profitability in quick commerce for an extended period as a key concern.
Nirmal Bang and MOFSL Maintain "Buy" Ratings
Nirmal Bang Institutional Equities reiterated its 'Buy' recommendation on Eternal, setting a target price of Rs 334. This suggests a potential 34% upside from current levels. The firm noted that high competitive intensity remains a core monitorable that could impact near-term growth and margins. Similarly, MOFSL maintained its 'BUY' rating with a target of Rs 340, also implying a 34% upside. MOFSL views Blinkit as a generational opportunity, disrupting industries like retail, grocery, and e-commerce, and anticipates Eternal reporting a PAT margin of 2.4% in FY27 and 3% in FY28.
Nuvama's Revised Price Target
Nuvama also maintained a 'BUY' rating but revised its target price to Rs 380 from Rs 430. The firm values the food delivery business at 40 times adjusted EBITDA and quick commerce at 50 times adjusted EBITDA on FY28 estimates. Nuvama tweaked its FY27E/28E EBITDA by 10%, accounting for increased competition in the quick commerce sector.
Long-Term Financial Goals
Eternal has set an ambitious target of achieving $1 billion in adjusted EBITDA for its consumer business by FY29. While this figure is slightly lower than some analyst and Bloomberg consensus estimates, the company believes that disciplined execution and a continued focus on profitability will enable it to reach this financial milestone.