Eternal shares have experienced a remarkable 21% surge over the past month, driven by a promising start to FY27. Despite this rally, the stock remains 20% below its October peak of Rs 368 per share. Analysts maintain a bullish outlook, citing robust growth levers for the food delivery major.
International brokerage Jefferies highlights the importance of quality growth, noting that Eternal's first-quarter results showed accelerated food delivery growth and better-than-expected profitability. The company has expressed confidence in managing competitive intensity in quick commerce, with a target price set at Rs 415. Eternal anticipates Blinkit's steady-state EBITDA margin to reach 6% of NOV, improving from an earlier estimate of 5-6%.
CLSA, another top bull, has retained its High Conviction Outperform rating on Eternal, with a target price of Rs 506, reflecting a 65% upside. The brokerage points to strong execution in quick commerce and food delivery, with profitability improving despite heightened competition. Eternal's management has guided towards higher long-term margins, with a reported EBIT margin of around 4% and adjusted EBITDA margin of around 6%.
“The first quarter reinforced the importance of quality growth over simply chasing market share.”
Jefferies
Motilal Oswal maintains a positive view on Eternal, setting a target price of Rs 400, implying a 41% upside. The brokerage acknowledges the challenges posed by elevated competition but views the guidance upgrade positively. Management's long-term targets of 60% NOV growth and an EBITDA target of $1 billion by FY29 are seen as increasingly achievable.
Technical analysts also note a positive trend for Eternal. Hitesh Tailor from Choice Broking highlights a bullish Golden Crossover on the daily chart, indicating a positive medium-term trend. Virat Jagad from Bonanza observes a strong two-day rally, confirming a breakout above the long-term falling trendline.
“Eternal's 1QFY27 results reinforced its view of strong execution.”
CLSA
Background
Eternal's recent performance is part of a broader trend of growth in the food delivery and quick commerce sectors. The company's strategic focus on quality growth and profitability, alongside its ability to navigate competitive pressures, positions it well for future success.
Looking ahead, investors will be watching for Eternal's ability to sustain its growth momentum and achieve its long-term financial targets. The stock's performance in the coming quarters will be crucial in determining whether it can surpass its previous peak.
