Following a seven percent increase in the previous session following its results report for the April-June period, shares of Eternal Ltd., formerly known as Zomato, a significant player in the food delivery and rapid commerce space, reached a new record high in the early hours of Tuesday, July 22.
For the first quarter of FY26, Eternal reported a sharp 90 percent year-over-year drop in net profit, with earnings dropping to Rs 25 crore from Rs 253 crore the previous year. Revenue increased 70% year over year to Rs 7,167 crore during the same time, despite the decline in profits.
The company’s shares were trading at Rs 311.25 at 9.40 a.m., up 11% on the NSE.
In the first quarter, Blinkit’s revenue of Rs 2,400 crore exceeded Zomato’s food delivery revenue of Rs 2,261 crore. In comparison to the same period previous year, the company’s consolidated EBITDA for the quarter was Rs 115 crore, a 35% decrease.
Eternal’s stock reached five-month highs during the previous session due to encouraging remarks from the management. According to the company, Blinkit’s net order value (NOV) surpassed Zomato’s for the first time. According to CFO Akshant Goyal, “quick commerce accounts for nearly half of our B2C operations, which have now reached nearly $10 billion in annualized NOV.”
Is it wise to purchase, sell, or hold Eternal stock?
Many brokerages continued to be optimistic about Eternal’s shares even after the company’s net earnings fell by 90% in trading.
Jefferies, a global brokerage business, raised its price objective of Rs 400 per share and improved its outlook on the company to “buy.” According to the brokerage, the management commentary was noticeably positive despite the mixed Q1 performance.
The margin outlook has improved as competitive pressures have subsided, and growth is still robust. The management anticipates a recovery even if the rise in food delivery slowed, with short-term margins staying rangebound.
CLSA reiterated its ‘high-conviction outperform’ tag on Eternal, maintaining its price target of Rs 385 per share, as Blinkit’s performance exceeded estimates in terms of GOV and contribution. Reiterating its ‘outperform’ rating, Bernstein raised its target price to Rs 320 per share due to the quick-commerce sector’s robust performance.
However, Macquarie was an anomaly, with a price target of Rs 150 per share and a rating of ‘underperform’. According to the brokerage, although rapid commerce saw tremendous growth, food delivery development lagged. It is thought to be a good thing that rapid commerce losses are moderate. Nonetheless, it is anticipated that the level of competition would remain strong, resulting in a protracted losing streak.
