Eternal shares jump 2% after strong Q2 show, brokerages see up to 34% upside
The company’s revenue from operations rose 77.6% YoY to Rs 24,138 crore in the quarter under review, from Rs 13,590 crore reported in Q2FY26
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 26.6% QoQ to Rs 752 crore in Q2FY27, compared with Rs 594 crore in Q1FY27. EBITDA margin expanded to 3.15% from 2.95% in the preceding quarter.
Buy, sell or hold Eternal shares?
Jefferies, with a Buy rating, has raised the target price to Rs 430 (34% upside). The brokerage said Eternal is accelerating its growth plans, supported by faster store expansion at Blinkit alongside improving unit economics, food delivery growth of over 20% and growing confidence in District. The brokerage has raised its adjusted EBITDA estimates for FY27-FY29 by 5-8% and increased its target price to Rs 430.
Beyond the second-quarter performance, Jefferies identified Eternal’s AI platform, dark.ai, as a key development to watch. While details remain limited and the outcome could be binary, the brokerage said it liked the company’s experimental approach. Management also remains unfazed by the emergence of agentic commerce and says ‘never a dull moment’.
Nomura has retained its Buy rating on Eternal with a target price of Rs 350, implying an upside of 12%. For Blinkit, the brokerage expects store additions to keep margins stable in the near term, with scale driving margin improvement over the longer term. It also expects greater overlap between traditional e-commerce and quick commerce going forward.
Nomura has raised its net order value (NOV) growth forecasts for FY27 and FY28 by around 8-10%. However, it has cut its adjusted EBITDA margin estimate for FY28 by 70 basis points to 1.3%, factoring in aggressive store expansion.On the food delivery business, Eternal noted that competitive intensity remains high. The company intends to keep margins stable in the near to medium term and reinvest any improvement in margins into growth, while maintaining its medium-term growth target of 20% year-on-year.
Nomura has lowered its adjusted EBITDA margin forecasts for food delivery by 20-50 basis points and expects NOV to grow 17-22% year-on-year in FY27 and FY28.
Morgan Stanley has maintained its Overweight rating on Eternal and raised its target price to Rs 417 from Rs 373, while naming the stock an Analyst Top Pick.
The brokerage said monthly transacting customer growth in quick commerce continues to exceed expectations, driven by strong performance in smaller cities. It also raised its weighted target price by 12%, led by an approximately 16% increase in its base-case valuation.
Nuvama has maintained its Buy rating on Eternal and raised its target price to Rs 420 from Rs 360. The brokerage said food delivery growth remained strong, although margins contracted slightly as management increased investments to drive growth. The company expects margins to remain flat over the next one to two years.
Blinkit continued to sustain its growth momentum, with margins improving 28 basis points quarter-on-quarter on operating leverage and faster store additions. Management has raised its store target to 3,500 by the end of FY27, from 3,000 earlier, and to 5,000 by FY28.
Nuvama has revised its FY27 and FY28 revenue estimates upwards by 6.1% and 4.4%, respectively, while raising its EBITDA estimates by 11.6% and 3.6%, respectively. At the current market price, Eternal trades at 89 times its estimated FY27 EBITDA and 43 times its FY28 EBITDA.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
