HDFC Securities has upgraded Eternal to a buy rating while holding its target price at Rs 340, implying over 48% upside from the current price of Rs 229. This move highlights Eternal's resurgence as a key force in India's digital consumption space, fueled by strong performance in food delivery, quick commerce via Blinkit, and new verticals. Investors now eye improved profitability amid operational expansions.
Execution Drives Growth Across Core Segments
Eternal outperforms rivals through efficient scaling in food delivery and quick commerce, maintaining discipline in a competitive market. Strategic moves like the Gold membership program boost monthly transacting users and order volumes, reviving demand. In food delivery, projections show 20% year-over-year monthly transacting user growth, 24% order volume increase, and 18% net order value rise, signaling deeper customer engagement.
Margins face short-term pressure from LPG shortages and wider delivery radii, but platform fee increases of 17-19% and higher minimum order thresholds for discounts counter these effects. Blinkit leads quick commerce with supply chain strengths, adding 250 dark stores for 10% quarter-over-quarter net order value growth at Rs 834,000 average daily per store. This segment nears adjusted EBITDA breakeven.
Emerging Verticals Add Long-Term Value
The going-out segment, via the District app, draws strong user interest in movies and live experiences, with adjusted EBITDA losses peaking at Rs 1.2 billion in Q3 before sequential declines. Management sees potential for a USD 3 billion net order value business at 5% EBITDA margin by FY30, yet current valuation assigns it minimal weight. Hyperpure and other units contribute further optionality.
Financial Outlook and Valuation Support Upgrade
Revenue projections climb to Rs 545,603 million in FY26E, Rs 885,305 million in FY27E, and Rs 1,181,771 million in FY28E, with adjusted EBITDA margins expanding from 2.0% to 3.2%. Earnings per share rise from Rs 0.3 to Rs 2.2 over the same period, underscoring a shift to profitable expansion.
| 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 yields Rs 340 per share: food delivery at 45x FY28 EV/EBITDA for Rs 134, quick commerce at 1.5x FY28 NOV for Rs 166, going-out at 1.0x GOV for Rs 18, and others at Rs 4. Risks include rising fulfillment costs, quick commerce competition, and execution in new areas. Support lies at Rs 210-200, resistance at Rs 260-300; accumulate on dips for 12-24 month horizons.
