HDFC Securities has lifted its rating on Eternal to BUY while holding the target price at Rs 340, implying more than 48% potential gain from the current price of Rs 229. This adjustment reflects analysts' rising conviction in Eternal's execution within India's fast-expanding digital consumption market, including food delivery, quick commerce through Blinkit, and newer areas like going-out services. The upgrade arrives as the company shows accelerating user growth and infrastructure buildup, even with short-term margin strains from operations.
Execution Strength Fuels Multi-Vertical Growth
Eternal distinguishes itself through consistent performance in food delivery and quick commerce, outpacing rivals in a crowded field. In food delivery, monthly transacting users should rise 20% year-over-year, with orders up 24% and net order value climbing 18%, pointing to deeper customer loyalty. Blinkit leads quick commerce with supply chain advantages, planning 250 new dark stores for 10% quarter-on-quarter net order value growth, averaging Rs 834,000 daily per store, and approaching adjusted EBITDA breakeven.
The going-out segment, via the District app, draws solid engagement in movies and events, with losses set to ease after peaking at Rs 1.2 billion in Q3. Management sees this evolving into a USD 3 billion net order value business at 5% EBITDA margins by FY30, yet current valuations assign it minimal weight.
Financial Outlook Signals Profitability Shift
Revenue projections underscore Eternal's scale: Rs 545,603 million in FY26E, expanding to Rs 1,181,771 million by FY28E. Adjusted EBITDA margins improve from 2.0% to 3.2% over that span, driven by efficiencies, with earnings per share jumping from Rs 0.3 to Rs 2.2.
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue (Rs mn) | 5,45,603 | 8,85,305 | 11,81,771 |
| Adj. EBITDA (Rs mn) | 10,913 | 24,777 | 37,230 |
| Adj. EBITDAM (%) | 2.0% | 2.8% | 3.2% |
| EPS (Rs) | 0.3 | 1.3 | 2.2 |
A sum-of-the-parts valuation supports the Rs 340 target: food delivery at 45x FY28 EV/EBITDA yields Rs 134 per share; quick commerce at 1.5x FY28 NOV adds Rs 166; going-out at 1.0x GOV contributes Rs 18; and Hyperpure plus others at a sales multiple bring Rs 4.
| Segment | Valuation Basis | Per Share Value (Rs) |
|---|---|---|
| Food Delivery | 45x FY28 EV/EBITDA | 134 |
| Quick Commerce | 1.5x FY28 NOV | 166 |
| Going-Out | 1.0x GOV | 18 |
| Hyperpure & Others | Sales Multiple | 4 |
| Total Equity Value | 340 |
Risks Tempered by Strategic Positioning
Near-term challenges include higher fulfillment costs from wider delivery radii and LPG shortages limiting menus, though platform fees rose 17-19% and minimum orders increased to counter them. Competition in quick commerce and execution in new verticals pose threats, but Blinkit's edge and food delivery discipline mitigate these. Support sits at Rs 210-200, resistance at Rs 260-300; analysts recommend accumulating on dips for 12-24 month holds, capitalizing on India's consumption boom.
