Even as Eternal Ltd basks in its Rs 3 lakh crore market cap — loftier than Tata Motors, ONGC or Wipro — global investors are growing increasingly wary. Foreign institutional investors (FIIs) have slashed their holdings in the company from 58% to 42%, marking a change of 17.02 basis points (bps) in the last 12 quarters, reflecting discomfort with stretched valuations over time and a business model still struggling to turn consistent profits.
According to Amit Khurana, Head of Research, Dolat Capital, a reason why large section of institutional investors are unwilling to pay so much (9x sales) could be because the business reflects negative free cash flow and competitive overhang.
The sharp FII retreat indicates that international investors — particularly those accustomed to mature-market metrics — are no longer convinced by Eternal’s growth-at-any-cost story.
In contrast, domestic institutional investors (DIIs) are doubling down on the Eternal-Blinkit bet. Their stake has more than quadrupled from 6% to 26.5% (20.55 percent) in 12 months, until June 2025, reflecting a change of 20.55 bps. This divergence in sentiment underscores how Indian investors is more willing to value Eternal through the lens of underpenetrated market potential and long-term category dominance — even if near-term profitability remains elusive.
The optimism is fuelled by Blinkit’s staggering 155% YoY GOV growth in Q1FY26 and rapid store expansion, which management believes can hit 2,000 outlets by year-end. But skeptics argue that these growth numbers mask deep structural risks. Global comparables like DoorDash (P/S ~4.5x), Meituan (~2.8x), and Delivery Hero (~1.2x) operate at significantly lower multiples despite stronger earnings visibility.
Valuations are running ahead of fundamentals is what analysts believe. Khurana said, “What we’re seeing is the market extrapolating very aggressively. Blinkit’s future looks exciting, but cost-side challenges remain, especially as expansion continues to eat into margins.”
That concern is also echoed by Vikas Gupta of Omniscience Capital (note, Omniscience doesn't have any position in the company). “If you're expanding into tier 3 and 4 towns with lower purchasing power and thinner margins, then the ‘profitable’ portion of growth may already be behind us,” he said.
For now, Eternal appears to have won the confidence of domestic investors betting on India’s long-term digital consumption story. But the global money is clearly not buying the narrative — not at these valuations.
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