Eternal shares jump 3% after Q1 results. Jefferies, CLSA and 4 other brokerages weigh in
The company’s revenue from operations came in at Rs 20,211 crore, a massive 182% jump from Rs 7,167 crore reported in the corresponding quarter of the previous financial year, Eternal said in a regulatory filing.
On a sequential basis, net profit declined 47% from Rs 174 crore posted in the previous quarter. Revenue from operations, on the other hand, rose 17% from Rs 17,292 crore, according to the company’s exchange filing.
Eternal shares: Buy, sell or hold?
JPMorgan maintained its Overweight rating on Eternal with a target price of Rs 390 (38% upside), calling the quarter strong but broadly in line with expectations, with growth accelerating across quick commerce, food delivery and District.CLSA retained its High Conviction Outperform rating on Eternal with a target price of Rs 506 (79% upside), saying the company’s Q1FY27 results reinforced its view of strong execution. Both quick commerce and food delivery posted faster growth, while profitability improved despite elevated competition.
Blinkit reported faster NOV growth along with greater confidence in profitability and cash generation. Zomato‘s growth accelerated to its fastest pace in six quarters, with limited impact from emerging no-commission platforms. Meanwhile, newer businesses such as District and Bistro continued to expand the ecosystem and drive customer engagement.
Jefferies maintained its Buy rating on Eternal with a target price of Rs 415, saying the first quarter reinforced the importance of quality growth over simply chasing market share. Food delivery growth accelerated alongside better-than-expected profitability, while quick commerce performance remained strong despite falling short of optimistic forecasts. The key takeaway for the brokerage was management’s growing confidence that competitive intensity in quick commerce has become more predictable and that value-led food delivery is unsustainable.
Blinkit does not favour a short-term discounting strategy, and management indicated it is comfortable with the broader market growing faster as a result.
Nomura retained its Buy rating on Eternal with a target price of Rs 350, implying a 24% upside, citing improving quick commerce profitability despite intense competition. Blinkit added 200 stores during the quarter, taking its total store count to 2,443. Management expects margins to continue improving, with competitive intensity having peaked in Q1FY27 and becoming more predictable.
Eternal now expects Blinkit’s steady-state EBITDA margin to reach 6% of NOV, compared with its earlier estimate of 5-6%, driven by efficiencies from larger stores and warehouses, deeper assortments, and better working capital management. The company expects net working capital days to decline from 18 to 12 in the steady state. Nomura forecasts 57-74% year-on-year NOV growth and adjusted EBITDA margins of 0.9-2% in FY27-28F.
Also read: Will Blinkit growth sustain amid competition? 5 things to know from Eternal’s shareholder letter
Motilal Oswal maintained its positive view on Eternal with a target price of Rs 400, implying a 41% upside. Management guided towards the higher end of its long-term margin range, with a reported EBIT margin of around 4% and an adjusted EBITDA margin of around 6%, compared with its earlier guidance range of 5-6%.
This came despite the recent increase in take rates not yet translating into contribution margin gains, which management attributed to minimum wage hikes across several states and the opening of larger stores. With the business model now established and competition becoming more predictable, management expects structurally higher margins going forward.
Motilal Oswal noted that continued elevated competition could affect near-term gains but viewed the guidance upgrade positively. The brokerage said management’s long-term target of 60% NOV growth and an EBITDA target of USD 1 billion by FY29 appear increasingly achievable, with its estimates continuing to factor in this long-term trajectory.
Emkay retained its Buy rating on Eternal and raised its target price by 8.1% to Rs 400 from Rs 370 after the company’s Q1FY27 results exceeded expectations. Emkay expects competitive intensity to remain elevated during the upcoming festive season but said Blinkit has demonstrated its ability to retain market share while maintaining profitability. The brokerage raised its FY27E and FY28E quick commerce NOV estimates by 5.4% and 8%, respectively, citing strong growth momentum. It retained its positive view based on Eternal’s strong execution in quick commerce, steady food delivery momentum, and adequate cash reserves.
Read more:Eternal Q1 Results: Cons PAT skyrockets 268% YoY to Rs 92 crore; revenue zooms 182%
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
