The share price of Eternal, formerly known as Zomato, is in focus, down over 2% after reporting a mixed set of numbers for Q2. The food delivery business clocked muted 5% QoQ growth in its net order value (NOV) but monthly transacting users (MTU) rose 5.2% QoQ. However, most brokerages have given a Buy recommendation on a 30 bps improvement in EBITDA margin as a percentage of net order value, expansion driven by ad monetisation, higher platform fees and a strong outlook for Blinkit.
Here is a detailed analysis of the expectations from key brokerages and the upside they expect over the next 12 months.
Motilal Oswal on Eternal: Betting on opportunity in Blinkit
Motilal Oswal has reiterated a ‘Buy’ on Eternal with a target price of Rs 410 per share. This implies an upside of 17% from current levels for the Eternal share price. The leading domestic brokerage house pointed out that “Eternal’s food delivery business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery, and e-commerce.”
Their valuation of the quick commerce business indicates a 12% cost of capital, and they have “assigned a 30x EV/EBITDA multiple to the food delivery business. Additionally, we ascribe a combined value of $1 billion to Hyperpure, Going-out, and other residual businesses,” Motilal Oswal added.
Nomura on Eternal: The big quick commerce boost
Eternal expects growth to pick up in the upcoming quarters of FY26 and expects net order value (NOV) growth to be 15% in FY26 and 20% in the medium- to long term. Nomura too maintained a Buy rating on the stock with a target of Rs 370 per share. This implies close to 10% upside from current levels. According to the brokerage house, improvement in growth rates would depend on the macro improvement.
According to Nomura, Eternal’s “strong cash balances of Rs 18,300 crore and a cash-generating food delivery business provide an advantage over other players in the quick commerce business.” However, heightened competition in the quick commerce business and slower-than-expected growth of the food delivery business remain key risks.
Additionally, Eternal noted that the recent GST rate cut is likely to drive demand growth in the medium-term. As per Nomura’s estimates, GST on delivery charges impacts 25% of the orders where a delivery fee is charged to the customers. The GST rate increase does not impact either the platform fees charged for food delivery or delivery charges on quick commerce deliveries.
Nuvama on Eternal: Quick commerce order value rising
Nuvama too has a Buy on Eternal and revised the target price higher to Rs 400 per share on faster-than-expected growth estimates. The target implies almost 17% upside from current levels. Blinkit’s net order value rose 26.9% QoQ on the back of rising monthly transacting customers. It’s seen a 140% YoY gain. Nuvama also noted that the dark store addition remained strong at 272 stores Vs 243 last quarter, taking the total count to 1,816 stores. The management now aims to open 2,100 dark stores by December this year and further expand this to 3,000 by March 2027.