Motilal Oswal's research report on Eternal
Eternal reported a 2QFY26 net revenue of INR135b (+90% QoQ/183% YoY). This high growth is mainly on account of shift to inventory ownership in quick commerce (Q-commerce), where revenue now also includes the full monetary value of goods sold as per Ind AS (and not just the marketplace commission). Food Delivery (FD) NOV came in at INR94.2b, below our estimate of INR97.9b. Blinkit NOV came in at INR116.7b (up 137% YoY) vs. our estimate of INR115.8b. For FD, adjusted EBITDA as a % of NOV margin was up 30bp QoQ to 5.3% vs. our estimate of 5.1%. Blinkit reported a contribution margin of 4.6% (3.9% in 1Q). Adj. EBITDA margin was -1.3%, below our expectation of -0.8%. Blinkit aims to achieve 3,000 stores by 4QFY26.
Outlook
Our TP of INR410 implies a 17% upside from the current level. The slowdown in FD has also continued in this quarter, and a slower uptick is expected in the near term. We reiterate our BUY rating on the stock.
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