Eternal has reached a stage where it is willing to let rivals grow faster if that growth is driven by heavy discounting, according to Jefferies, which believes the June-quarter earnings reinforce a significant change in the company’s strategy. Rather than pursuing market share at any cost, the brokerage said Eternal is focusing on profitable growth across both food delivery and quick commerce, with Blinkit already demonstrating that improving margins and rapid expansion can coexist. The stronger operating performance prompted Jefferies to retain its ‘Buy’ rating on the stock and raise its target price to Rs 415 from Rs 400, implying an upside of about 45%.
Jefferies: Eternal doesn’t see discounting as route to leadership
Jefferies said the biggest takeaway from management’s commentary was not the quarterly numbers but the confidence with which Eternal addressed competition in quick commerce.
According to the brokerage, management described aggressive discount-led competition as a “systemic trap”, arguing that companies eventually reach a point where they have to choose between growth and profitability. Eternal believes there is little evidence that deep discounting creates durable customer loyalty, prompting Blinkit to use price incentives only where they create sustainable long-term value rather than short-term order growth.
Jefferies added that management appeared comfortable with competitors temporarily growing faster if that growth depends on sustained cash burn. Instead, Eternal believes stronger customer retention and higher spending from existing users provide a better measure of business quality than headline market share.
The brokerage pointed to customer cohorts acquired three years ago, noting that these users now spend around three times what they did when they first joined the platform, which management cited as evidence that retention rather than discounting is driving long-term value creation.
Blinkit delivers another profitable quarter
Quick commerce net order value (NOV) increased 19% quarter on quarter to Rs 17,132 crore, supported by growth in monthly transacting users, higher order volumes and continued investments in assortment, geographical reach and supply infrastructure. Monthly transacting users increased to 31.8 million from 27.2 million in the previous quarter, while the number of orders rose 21% quarter on quarter to 331 million.
The brokerage said Blinkit’s adjusted EBITDA improved to Rs 102 crore, equivalent to 0.6% of NOV, compared with Rs 37 crore in the previous quarter. Contribution increased to Rs 907 crore, although contribution margin remained broadly stable at 5.3% as the company continued investing in growth.
Jefferies also highlighted that inventory losses, including pilferage and shrinkage, remain contained at around 1.8% of NOV, reflecting operational discipline despite rapid expansion.
Jefferies on Eternal: Premium customers the next opportunity
Jefferies said Eternal is widening Blinkit’s addressable market through new premium offerings rather than relying solely on discounting.
Management has started rolling out Gourmet stores across select locations in the top eight cities to strengthen Blinkit’s premium assortment.
The brokerage said management nevertheless expects average order values to remain broadly range-bound even as the premium offering expands, while continuing to target return on capital employed (ROCE) of more than 40% despite ongoing investments in dark-store expansion.
Food delivery continues to grow; margins at multi-quarter highs
Jefferies said Eternal’s food delivery business produced another strong quarter, demonstrating that higher growth need not come at the expense of profitability.
Food delivery NOV increased 20% year on year to Rs 10,769 crore, while monthly transacting users rose to 27.2 million from 22.9 million a year earlier. The number of orders increased 22% year on year to 285 million, while average order value remained steady at Rs 461.
Take rates improved to 32.8% from 32.0% in the previous quarter, helping adjusted EBITDA rise 34% year on year to Rs 606 crore. EBITDA margin reached 5.6% of NOV, the highest level in several quarters. Contribution margin remained stable at 10.2%, despite continued spending to support growth.
Jefferies said the quarter demonstrated the strength of Eternal’s operating model, with management arguing that profitability and growth reinforce each other rather than compete for capital.
Management dismiss concerns over Swiggy’s Toing and Rapido’s Ownly
Jefferies said management does not view recently launched low-cost food delivery offerings from competitors as a structural threat.
According to the brokerage, Eternal believes Toing from Swiggy and Ownly from Rapido primarily target customers seeking the lowest possible prices, a proposition that management considers difficult to sustain over long periods.
The company has responded selectively in markets where necessary but does not believe industry-wide discounting is the right answer. Instead, management argued that lower average order value segments require supply-chain innovation rather than price cuts.
Bistro reflects Eternal’s effort to rethink low-ticket food delivery
Jefferies said Eternal is experimenting with a different operating model to improve economics in the low average order value segment.
Management believes the solution lies in food manufacturing and supply-chain efficiencies rather than conventional restaurant aggregation.
The brokerage highlighted Bistro, Eternal’s cloud-kitchen format built around a limited menu and high-volume production, as an example of this approach. The management believes the format could address customer demand for lower-priced meals without relying on aggressive discounting.
Going-out and Hyperpure continue to strengthen
Beyond food delivery and quick commerce, Jefferies said Eternal’s other businesses also reported encouraging progress.
The company’s Going-out business recorded 60% year-on-year growth in NOV, while adjusted EBITDA losses moderated further.
Hyperpure’s like-for-like revenue increased 27% year on year, with adjusted EBITDA improving to Rs 6 crore.
Jefferies also noted that Eternal expenses employee and technology costs instead of capitalising them, making its reported profitability more conservative than companies that capitalise such expenditure.
Jefferies raises earnings estimates after the June quarter
Following the quarterly performance, Jefferies increased its adjusted EBITDA estimates for FY27 through FY29 by 2% to 5%.
The brokerage said stronger profitability in Blinkit and sustained momentum in food delivery were the primary reasons behind the revisions.
Jefferies retains ‘Buy’, raises target price to Rs 415
Jefferies retained its ‘Buy’ rating on Eternal and increased its target price to Rs 415 from Rs 400.
The brokerage values Eternal using a sum-of-the-parts methodology, assigning a 40x September 2028 EBITDA multiple to the food delivery business, 1.2x September 2028 revenue to Blinkit and 1.5x gross order value to the Going-out business, resulting in a total equity value of Rs 415 per share.
Conclusion
Jefferies believes Eternal’s latest quarterly performance marks an important point in the company’s evolution from a business focused primarily on growth to one increasingly centred on returns.
The brokerage said Blinkit’s improving profitability, stronger food delivery margins, disciplined approach to competition and continued progress across newer businesses reinforce management’s view that sustainable earnings matter more than headline market share.
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