HDFC Securities Upgrades Eternal to Buy Rating at Rs 340 Target
HDFC Securities has lifted its rating on Eternal to Buy while holding the target price at Rs 340, implying more than 48% upside from the current market price of Rs 229. The upgrade highlights Eternal's resurgence as a leader in India's digital consumption space through food delivery, quick commerce, and new verticals. This positions the stock as an attractive option for investors focused on medium- to long-term growth in a competitive market.
Execution Strength Across Core Verticals
Eternal outperforms peers by scaling food delivery and quick commerce efficiently. In food delivery, monthly transacting users should rise 20% year-over-year, with order volumes up 24% and net order value growing 18%. Blinkit, the quick commerce arm, adds about 250 dark stores quarterly, targeting 10% sequential growth in net order value and average daily throughput of Rs 834,000 per store.
These gains stem from user expansion via programs like Gold membership, which boost order frequency. Platform fee increases of 17-19% counter higher fulfillment costs from wider delivery radii and past supply issues like LPG shortages. Blinkit nears adjusted EBITDA breakeven, widening its lead over rivals struggling with unit economics.
Financial Outlook Signals Profitability Shift
Revenue projections show steady acceleration: Rs 545,603 million in FY26E, rising to Rs 1,181,771 million by FY28E. Adjusted EBITDA margins improve from 2.0% to 3.2% over the same period, with earnings per share climbing to Rs 2.2 by FY28E.
| 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 |
The sum-of-the-parts valuation assigns Rs 134 to food delivery at 45x FY28 EV/EBITDA, Rs 166 to quick commerce at 1.5x FY28 NOV, Rs 18 to going-out at 1.0x GOV, and Rs 4 to Hyperpure and others, totaling Rs 340 per share. The going-out segment, via the District app, could reach USD 3 billion in net order value by FY30 with 5% EBITDA margins, yet carries minimal current valuation.
Risks Tempered by Strategic Positioning
Near-term margin squeezes from logistics costs and competition in quick commerce pose challenges, alongside execution demands in going-out, where losses peak at Rs 1.2 billion in Q3 before easing. Support levels sit at Rs 210-200, with resistance at Rs 260-300.
For medium- to long-term horizons of 12-24 months, accumulate on dips near supports. Eternal's multi-vertical model—food delivery revival, Blinkit dominance, and going-out potential—fuels a shift toward sustained profitability in India's digital economy.
