Eternal shares gain after Q1 profit; brokerages see strong growth and execution

Eternal shares rose 2.4 per cent on the NSE to ₹291.35 on Thursday after the company reported a consolidated net profit of ₹92 crore in the June quarter. The stock gained as brokerages highlighted strong execution, accelerating growth in food delivery and quick commerce, and improving profitability despite elevated competition.

CLSA retained its high conviction outperform call with a target price of ₹506, saying the first quarter reinforced its view on strong execution. It said both quick commerce and food delivery saw growth acceleration, while profitability improved despite elevated competition. The brokerage also highlighted Blinkit’s acceleration in NOV growth and increased confidence in profitability and cash generation.

Jefferies retained its buy call with a target price of ₹415. It said the first quarter reinforced the importance of quality growth over chasing share. Food delivery accelerated with better-than-expected profitability, while the quick commerce outcome was positive despite missing its optimistic forecast.

Nomura retained its buy call with a target price of ₹350, highlighting further acceleration in food delivery and a rebound in quick commerce growth alongside continued profitability improvement. It said Blinkit now expects steady-state EBITDA margin, as a percentage of NOV, to be 6 per cent, compared with 5-6 per cent earlier, driven by a focus on efficiencies through large stores and warehouses, deeper assortments and efficient working capital management.

HSBC retained its buy call with a target price of ₹340, saying both food delivery and quick commerce grew strongly in the first quarter, while margins also improved slightly with operating leverage. The brokerage said the first-quarter strength reinforced confidence in its FY27 estimates as competition appeared stable.

Citi retained its accumulate recommendation and raised its target price to ₹385 from ₹360. It said Eternal was solidifying its leadership position in quick commerce with structural advantages and that discounts alone were unlikely to threaten or disrupt its position. Citi also highlighted the company’s plans to expand geographically with a deeper presence in next-tier cities.

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JPMorgan retained its overweight call with a target price of ₹390. It described the quarter as strong but in line, with acceleration across quick commerce, food delivery and District. Quick commerce NOV q-o-q growth rebounded to 19 per cent, while monthly transacting customers grew 17 per cent q-o-q and EBITDA rose to 0.6 per cent of NOV despite elevated competitive activity.

The brokerage said management pointed to peak competitive intensity and expressed confidence in dealing with competitive actions that have become predictable. It also noted that Eternal increased its long-term adjusted EBITDA margin target to 6 per cent of NOV and raised its capex per store target to ₹25 million from ₹10 million.

Morgan Stanley retained its overweight recommendation and raised its target price to ₹373 from ₹347. It said execution drives conviction, with steady momentum in food delivery and quick commerce NOV growth expected to continue. The brokerage said management’s strategy of maintaining growth momentum irrespective of competition was comforting and that management believes quick commerce steady-state margins can be at the upper end of a 5-6 per cent range.

Motilal Oswal reiterated its buy rating with a target price of ₹400. It said Eternal’s food delivery business remains stable, while Blinkit continues to offer a long runway to participate in the structural shift in retail, grocery and ecommerce. The brokerage trimmed its FY27E EPS estimate by 7 per cent, largely due to higher-than-expected tax in the first quarter, while keeping its FY28E estimates unchanged.

Elara Capital retained its buy call with a target price of ₹400. It expects food delivery EBITDA CAGR of 23 per cen...