Buy ETERNAL; target of Rs 330: Emkay Global Financial

Buy

Emkay Global Financial' research report on ETERNAL

Eternal registered strong 1Q results, with Blinkit reporting 140% YoY GOV growth and 50bps QoQ improvement in adj EBITDA margin. Over the next 2-3 quarters, Eternal is set to gradually make a transition in the quick commerce (QCom) business, from its current marketplace model to an inventory ownership model; this will drive ~100bps margin expansion, albeit require net working capital of ~18 days. The management sees enough room for storecount expansion in all cities, to 3,000 stores from the 1,544 currently. Food delivery GOV grew 16% YoY, and the management expects FY26 GOV growth at 15-20%. We believe QCom has a long growth runway and Blinkit is seen capitalizing well on this. As QCom is currently in the ‘landgrab’ phase, we believe EBITDA breakeven for Blinkit is still some time away. Food delivery is likely to remain a cash cow for the company, and we expect the business to see 20%+ EBITDA CAGR over the long term.

Outlook

We retain BUY on the stock while revising up our TP (DCF-based) by ~14% to Rs330 (from Rs290 earlier).

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Eternal - 22072025 - icici