Eternal is one of the key gainers on Nifty today. The share price of Eternal has surged over 5% intra-day. Brokerages have given a thumbs up to the stock after the Rs 15 platform fee hike. Can the latest platform fee hike by Zomato help boost margins without hurting demand? Well, Elara Securities retained a ‘Buy’ rating on Eternal (Zomato) with a target price of Rs 415. This implies over 80% upside from current levels.
The brokerage said the increase in platform fees, now at Rs 15 per order, aligns Zomato with its closest competitor, Swiggy and strengthens its path towards achieving profitability targets.
Platform fee hike to lift margins
Zomato has raised its platform fee by around 20% to Rs 15 per order. According to Elara, every Rs 1 increase in platform fee can drive about 26 basis points expansion in take rate and add roughly Rs 120 crore to adjusted EBITDA.
In a base-case scenario where the revised fee is implemented across 50% of markets, the brokerage estimates a 40 basis point increase in take rate and a 7.5% uplift, or about Rs 1.8 billion, in FY27 adjusted EBITDA.
The move is largely in line with management’s guidance of achieving adjusted EBITDA margins of 5–6%, with Elara expecting margins to reach around 6% by FY28.
Growth remains resilient despite higher fees
One concern with raising fees is that it could reduce orders. But Elara said that hasn’t happened so far. Zomato has steadily increased its platform fee from Rs 2 in August 2023 to Rs 15 now, and growth has still remained strong.
Data cited in the report shows that food delivery gross order value (GOV) growth rebounded to over 20% in Q3FY26 after a temporary slowdown, driven by a sharp acceleration in monthly transacting users (MTUs), which grew to around 22%. Basically, this means that user growth continued to be strong enough to absorb gradual increases in platform charges.
Why demand elasticity may not be a concern
Elara believes the current platform fee is still too small to deter customers. At Rs 15 per order, the fee accounts for just about 3.1% of the average order value of roughly Rs 475.
“This level of fee is not adequate to trigger any meaningful elasticity for consumers,” the brokerage noted, adding that parity with Swiggy further reduces the risk of customers shifting platforms. As a result, order flows are expected to remain stable even after the hike.
Cushion against rising costs
The report further added that beyond the margin expansion, the higher platform fee can also provide a buffer against potential cost pressures, which include fuel prices. According to Elara, a 10% increase in fuel prices could negatively impact the food delivery EBITDA by as much as Rs 0.9 billion.
Furthermore, the brokerage firm also explained that only 10% of the gig workers are using electric vehicles for delivery, which puts the sector at further risk of fuel price volatility.
Outlook: steady path to profitability
To conclude, the brokerage firm reiterated that they are positive on Zomato’s future. The report noted that more people are using the app, orders are growing steadily, and the company is earning better through platform fees. The recent fee hike is already included in its estimates, but there could be more upside if the Rs 15 fee is rolled out everywhere.