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 reflects confidence in Eternal's execution across food delivery, quick commerce via Blinkit, and emerging verticals amid India's expanding digital consumption market. Investors now eye the company's shift toward sustained profitability despite short-term margin challenges.
Execution Strength Fuels Multi-Vertical Expansion
Eternal distinguishes itself through dominant performance in India's competitive digital commerce space, scaling food delivery and quick commerce while advancing new areas like going-out services. Blinkit's supply chain edge drives market share gains as rivals face unit economics hurdles, with plans for 250 additional dark stores projecting 10% quarter-on-quarter growth in net order value and average daily throughput of Rs 834,000 per store. Food delivery shows revival with expected 20% year-on-year monthly transacting user growth, 24% order volume increase, and 18% net order value rise, bolstered by initiatives like the Gold membership program that lift user engagement.
Path to Profitability Takes Shape
Near-term pressures from LPG shortages and wider delivery radii prompt platform fee increases of 17-19% and higher minimum order thresholds to safeguard margins. Blinkit approaches adjusted EBITDA breakeven, a pivotal step, while the going-out segment via the District app sees losses peak at Rs 1.2 billion in Q3 before sequential moderation, with potential to reach a USD 3 billion net order value business at 5% EBITDA margin by FY30. Financial projections underscore this trajectory:
| 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 |
Adjusted EBITDA margins expand steadily through operating leverage, with earnings per share rising sharply.
Valuation Highlights Compelling Opportunity
A sum-of-the-parts analysis supports the Rs 340 target:
| 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 |
The going-out vertical adds unpriced optionality. Key risks include escalating fulfillment costs, quick commerce rivalry, and execution in new areas. Support lies at Rs 210-200, resistance at Rs 260-300; medium- to long-term investors should accumulate on dips for optimal entry into this multi-engine growth story.