HDFC Securities has upgraded Eternal to a BUY rating while holding its target price at Rs 340, implying more than 48% upside from the current market price of Rs 229. This decision highlights analysts' confidence in Eternal's execution within India's digital consumption space, spanning food delivery, quick commerce through Blinkit, and new verticals. The upgrade signals a shift toward long-term profitability amid accelerating user growth and infrastructure expansion.
Execution Strength Across Core Verticals
Eternal outperforms peers by scaling efficiently in a competitive digital commerce environment. In food delivery, monthly transacting users should rise 20% year-over-year, with order volumes up 24% and net order value growing 18%. Recent challenges like LPG shortages limited menus but barely dented volumes, while platform fee increases of 17-19% counter higher fulfillment costs from wider delivery radii.
Quick commerce stands out with Blinkit's supply chain edge, capturing market share as rivals struggle with economics. Plans call for 250 new dark stores, targeting 10% quarter-on-quarter net order value growth and Rs 834,000 average daily net order value per store. Blinkit approaches adjusted EBITDA breakeven, a key profitability milestone.
The going-out segment, via the District app, shows user traction in movies and live events. Adjusted EBITDA losses, which peaked at Rs 1.2 billion in Q3, should ease from Q4, with potential to reach a USD 3 billion net order value business at 5% EBITDA margin by FY30. Current valuation assigns minimal credit to this area.
Financial Projections Point to Margin Expansion
Revenue forecasts show steady climbs, with adjusted EBITDA margins improving from 2.0% in FY26E to 3.2% in FY28E. Earnings per share accelerates from Rs 0.3 to Rs 2.2 over the same period, underscoring a profitable growth phase.
| 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 |
Valuation and Risks Shape Investor Outlook
A sum-of-the-parts analysis yields the Rs 340 target: food delivery at 45x FY28 EV/EBITDA contributes Rs 134 per share, quick commerce at 1.5x FY28 NOV adds Rs 166, going-out at 1.0x GOV brings Rs 18, and Hyperpure plus others via sales multiple account for 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 include rising fulfillment costs, quick commerce competition, and execution in new areas. Support sits at Rs 210-200, resistance at Rs 260-300. Analysts recommend accumulating on dips for a 12-24 month horizon, positioning Eternal as a multi-vertical growth engine in India's consumption boom.
