Goldman Sachs has maintained its BUY recommendation on Eternal Ltd. and raised its price target to ₹385 per share from its previous target, implying a potential upside of around 16% from the stock's Monday closing price of ₹331.25. According to CNBC TV18, the brokerage continues to view Eternal as one of its top picks in India's internet sector, citing four key factors that could support the stock going forward. Eternal shares ended Monday's session 1.12% lower at ₹331.25, though the stock has gained around 17% so far this year despite recent weakness. The revised target reflects Goldman Sachs' increased confidence in the company's growth trajectory and strategic positioning across its key business segments.
Eternal delivered exceptional Q1 results with revenue from operations surging 182% year-on-year to ₹20,211 crore, compared to ₹7,167 crore in the corresponding quarter of the previous financial year, as reported by The Economic Times. On a sequential basis, revenue grew 17% from ₹17,292 crore, while net profit declined 47% from ₹174 crore posted in the previous quarter. The brokerage sees an increasing probability of the company achieving $1 billion in EBITDA by FY29, driven by Blinkit's robust growth and steady-state margin expansion alongside stabilising competitive intensity in quick commerce. Goldman Sachs sees greater visibility with each subsequent quarter into Eternal's $1 billion FY29 EBITDA guidance, believing continued progress towards this target could drive further multiple re-rating.
Blinkit's net order value (NOV) is expected to grow 17% quarter-on-quarter and 71% year-on-year in Q2FY27, with EBITDA margin expanding by 30 basis points to 0.9% of NOV, according to The Economic Times. The company now expects Blinkit's steady-state EBITDA margin to reach 6% of NOV, compared with its earlier estimate of 5-6%, driven by efficiencies from larger stores and warehouses, deeper assortments and better working capital management. Goldman Sachs sees sustained strength in Blinkit's growth, noting there could be significant upside if Blinkit delivers on its three-year 60% NOV compound annual growth rate (CAGR) guidance, compared with the brokerage's estimate of 45%. Nomura forecasts 57-74% year-on-year NOV growth and adjusted EBITDA margins of 0.9-2% in FY27-28F, while Jefferies noted that Blinkit is not pursuing a short-term discounting strategy, with management indicating comfort with broader market growth.
Food delivery NOV growth is estimated at 20% year-on-year, with margins broadly flat quarter-on-quarter, as reported by The Economic Times. Goldman Sachs also noted marginally lower competitive intensity in quick commerce compared with 1HCY26 and sees potential for food delivery market share gains after a period of stability. Goldman Sachs sees early signs of market-share gains in food delivery after several quarters of stable market share, expecting Eternal to continue improving margins in the business. Jefferies highlighted management's growing confidence that competitive intensity in quick commerce has become more predictable, with the brokerage noting that value-led food delivery is unsustainable. Among analysts tracking the stock, 31 of 34 have a 'Buy' recommendation, while three have a 'Sell' rating, as reported by CNBC TV18.
Goldman Sachs sees further optionality from Eternal's newer businesses, including Going-Out, expanding the company's growth potential beyond its core quick commerce and food delivery segments. Eternal was also included in Bernstein's India model portfolio in August last month, with Bernstein noting the company continues to demonstrate competitive strengths in a sector where raising capital is becoming increasingly difficult. The brokerage's comprehensive analysis highlights Eternal's diversified growth strategy and strong market positioning across multiple verticals, supporting its optimistic outlook for sustained performance in India's competitive internet sector.
