Eternal Gains Over 3%; Analysts See Up To 41% Upside After Q1 Results

Shares of Eternal rose more than 3% on Thursday after the food delivery and quick commerce company reported its June-quarter earnings, with analysts highlighting improving profitability in Blinkit, resilient food delivery growth and a stronger long-term margin outlook. The stock gained over 3.5% to ₹295 on the NSE in early trade.

Eternal reported a 268% surge in consolidated net profit to Rs 92 crore in Q1 FY27, compared with Rs 25 crore in the corresponding quarter last year. The profit is attributable to the owners of the parent company.

Revenue from operations, however, surged 182% year-on-year to ₹20,211 crore from ₹7,167 crore, driven by strong growth across its businesses.

On a sequential basis, net profit declined 47% from ₹174 crore, while revenue rose 17% from ₹17,292 crore.

Blinkit Margins Boost Confidence

Brokerages said Blinkit's improving profitability remained the biggest positive from the June quarter, with management indicating that competitive intensity in quick commerce has become more predictable.

JPMorgan, which maintained its 'Overweight' rating, described the quarter as broadly in line with expectations, noting that growth accelerated across Blinkit, food delivery and District. Jefferies said the results reinforced the importance of quality growth over simply chasing market share, highlighting stronger-than-expected profitability in the food delivery business and management's confidence that value-led competition is unlikely to be sustainable.

Nomura also retained its positive view, citing improving profitability in the quick commerce business despite intense competition. The brokerage noted that Blinkit added 200 stores during the quarter, taking its total store count to 2,443, and expects margins to continue improving as competitive intensity moderates after peaking in the first quarter.

Higher Margin Guidance Lifts Outlook

Management raised Blinkit's steady-state EBITDA margin expectation to 6% of NOV, compared with its earlier guidance of 5-6%, supported by efficiencies from larger stores and warehouses, deeper assortments and improved working capital management.

Motilal Oswal Financial Services said the upgraded margin guidance reinforces confidence in Blinkit's business model and long-term profitability. While recent increases in take rates have not yet translated into higher contribution margins due to minimum wage hikes and investments in larger stores, the brokerage believes structurally higher margins are achievable as competition becomes more predictable.

Nomura expects Blinkit's profitability to continue improving and forecasts 57-74% year-on-year NOV growth along with adjusted EBITDA margins of 0.9-2% during FY27-FY28. Jefferies also believes management's focus on sustainable growth rather than aggressive discounting positions the business well for long-term value creation.

Brokerages See Up To 41% Upside

Brokerages largely maintained their bullish stance on Eternal following the June-quarter performance.

JPMorgan retained its 'Overweight' rating with a target price of ₹390, while Jefferies maintained its 'Buy' rating and a Street-high target price of ₹415.

Nomura reiterated its 'Buy' rating with a target price of ₹350, citing improving quick commerce profitability and expanding margins.

Motilal Oswal maintained its positive view with a target price of ₹400, saying management's long-term targets of 60% NOV growth and $1 billion EBITDA by FY29 appear increasingly achievable.

Emkay also retained its 'Buy' rating and raised its target price to ₹400 from ₹370 after the company's June-quarter results exceeded expectations. The brokerage expects competitive intensity to remain elevated during the festive season but believes Blinkit has demonstrated its ability to retain market share while maintaining profitability.

Based on Wednesday's closing price, brokerage target prices imply a potential upside ranging from around 24% to 41%, reflecting continued confidence in Eternal's execution across quick commerce and food delivery despite an increasingly competitive market