Eternal share price (formerly Zomato) soared 10% in early trade on Tuesday, brushing off a sharp dip in profits reported for the June quarter. Furthermore, multiple brokerages have issued ‘Buy’ ratings on the stock, with upside potential pegged at up to 18%.
Profit falls but revenue shines
In its Q1FY26 earnings announced on July 21, Eternal reported a 90% year-on-year drop in net profit, falling to Rs 25 crore from Rs 253 crore in the same quarter last year. But why is the stock rallying then? According to the company, revenue from operations rose sharply by 70% YoY to Rs 7,167 crore, mainly led by the performance of its quick-commerce arm, Blinkit. The overall consolidated revenue climbed 67% YoY and 22% sequentially, marking the 11th consecutive quarter of over 50% YoY adjusted revenue growth.
Let’s take a look at what is driving this optimism despite the earnings disappointment and why brokerages are bullish on this stock-
Nomura on Eternal
The brokerage house Nomura has retained a ‘Buy’ rating to Eternal and has raised its target price to Rs 300 from Rs 280, implying an upside of 10.3%.
As per the brokerage report by Nomura, Eternal’s food delivery (FD) segment saw 10% QoQ and 16% YoY growth in gross order value (GOV), in line with expectations. Monthly transacting users (MTUs) rose 9.6% QoQ to 22.9 million, while the platform’s take rate improved by 10 basis points to 24.7%.
Nomura noted, “Management indicated that growth revival is a key near-term priority even if it means keeping contribution margin around the current level.” The brokerage expects FD GOV growth at 16% in FY26, slightly lower than FY25’s 20%.
On Blinkit, the report highlighted a strong showing in Q1FY26 with GOV of Rs 11,800 crore, up 25% QoQ and 140% YoY, driven mainly by a 23% jump in MTUs. Contribution margin remained stable at 3%, and adjusted EBITDA margin improved 50 basis points to -1.4%, supported by reduced marketing costs.
“We expect Blinkit to break-even at adj EBITDA level in 4Q FY26F,” Nomura said.
“The company is not burning cash at the EBITDA level (because of strong cash generation in core FD),” the report further added.
JM Financial on Eternal
The brokerage has given a buy rating to the Eternal with target price of Rs 320. This implies an upside potential of 17.8% from the current market price.
According to JM Financial’s brokerage report, the big surprise in Q1 came not just from the numbers, but from the management’s positive commentary.
“Adj. EBITDA losses in Blinkit have peaked out, not only in margin terms but also on an absolute basis,” JM Financial noted.
The brokerage added that the company’s move to an inventory-led model in Blinkit could expand margins by approx. 100 basis points (as a percentage of net order value), with minimal capital investment (18 days or 5% of NOV). Moreover, Blinkit plans to double its dark store count from 1,544 to 3,000.
In terms of performance, Blinkit posted YoY GOV growth of 140%, ahead of JM’s estimate of 129%, though adjusted EBITDA losses at Rs 162 crore were marginally higher than expected.
“We believe the positives in Blinkit are likely to outweigh the misses in other businesses,” the report said, reaffirming Eternal as a preferred pick with a target price of Rs 320, implying an upside of 17.8%.