HDFC Securities Upgrades Eternal to Buy with Rs 340 Target Price
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 the company's resurgence in India's digital consumption space through strong execution in food delivery and quick commerce via Blinkit. Investors now eye Eternal's path to profitability amid expanding user bases and infrastructure.
Execution Drives Growth Across Core Verticals
Eternal outperforms peers by scaling food delivery and quick commerce with operational discipline in a competitive market. Strategic moves like the Gold membership program boost monthly transacting users and order volumes, signaling demand recovery. In food delivery, projections show 20% year-on-year MTU growth, 24% order volume rise, and 18% net order value increase, despite LPG shortages and wider delivery radii prompting 17-19% platform fee hikes.
Blinkit Leads Quick Commerce Expansion
Blinkit's integrated supply chain secures market share gains as rivals face unit economics challenges. Plans for 250 new dark stores support 10% quarter-on-quarter net order value growth, with average daily NOV per store at Rs 834,000. The segment nears adjusted EBITDA breakeven, a key profitability milestone.
Financial Projections and Valuation Support Upside
Revenue forecasts climb to Rs 545,603 million in FY26E, reaching Rs 1,181,771 million by 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 period.
| 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 |
| 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 Temper Near-Term Outlook
Fulfillment costs from logistics expansion pressure margins unless pricing offsets them. Quick commerce competition could slow momentum, while the going-out segment demands sustained investment despite moderating losses from Rs 1.2 billion in Q3. Support levels sit at Rs 210-200, with resistance at Rs 260-300; medium- to long-term investors should accumulate on dips for optimal entry into this multi-vertical growth story.
