Eternal shares trade flat post-Q2 results; brokerages bullish despite EBITDA miss: Check target prices

At the time of write the report at around 10.20 am, the stock was trading down 0.53 per cent at Rs 310.25, as investors appeared to focus on higher growth investments and EBITDA miss, even as revenue and order values registered strong growth in Q2FY27 earnings, released by the company on Wednesday post market hours. Eternal Q2FY27 results details Eternal’s revenue from operations stood at Rs 24,138 crore in the quarter under review, up from Rs 13,590 crore on a year-on-year basis, according to a regulatory filing to the exchanges.

Meanwhile, its total expenses also shot up to Rs 24,166 crore from Rs 13,813 crore a year ago. Blinkit added 308 net new stores, taking its network to 2,751 stores, and expects to cross 3,500 stores by March 2027. For Zomato, the food delivery NOV (net order value) grew 21.5 per cent year-on-year to Rs 11,445 crore, Eternal stated in the filing. The quick commerce NOV grew 79.3 per cent to Rs 20,940 crore, with Blinkit reporting Rs 184 crore adjusted EBITDA profit and a sixth consecutive quarter of margin improvement, Eternal said.

Eternal Founder Deepinder Goyal said, "We're happy with how the business is doing right now. That said, we try not to read too much into any single quarter. Our long-term expectation for food delivery has always been 20 per cent plus annual growth, and the last two quarters have brought us back to that range. This view didn't change last year when growth slowed, and it doesn't change now that it has picked up."

Commenting on the quick commerce segment, Akshant Goyal, CFO, Eternal, said, "We now expect to cross 3,500 stores by March 2027, and our current plans point to about 5,000 stores by March 2028. Our cash balance and profits from both food delivery and quick commerce businesses, also let us fund this pace of growth comfortably. We expect adjusted EBITDA margins to keep improving through this expansion."

Zomato share price target: What brokerages say Meanwhile, major brokerages shared mixed review following the Q2FY27 results of the company, balancing strong revenue growth against an escalation in growth investments. Global brokerage firm JPMorgan maintained its Overweight rating on Eternal, with a target price of Rs 420, stating that the second-quarter print exceeded expectations across food delivery and quick commerce NOV (net order value) but missed consensus estimates for EBITDA in both businesses.

The brokerage highlighted that the company’s food delivery NOV growth continued to accelerate for the fifth consecutive quarter to around 21 percent year-on-year, driven by an increase in monthly transacting customers (MTCs) as well as order frequency. JPMorgan further stated that Eternal appeared confident of sustaining at least 20 percent YoY growth in food delivery while keeping margins broadly flat over the next one to two years.

It said Blinkit's NOV growth accelerated to 22 percent on quarter-on-quarter (QOQ) basis, while adjusted EBITDA margin improved by 30 basis points (bps) sequentially to 0.9 percent of NOV. The brokerage also noted that management reiterated its long-term quick commerce growth ambitions, including a 60 percent compound annual growth rate in NOV through FY29. The increased store targets reflect management's confidence in recovering payback periods, despite competition and success in smaller cities and newer stores around newer product categories.

Brokerage CLSA has maintained High Conviction Outperform rating on Eternal, with a target price of Rs 506, describing the second quarter as broadly in line, with better growth and contribution from both Blinkit and Zomato. However, the brokerage said Blinkit's adjusted EBITDA missed elevated expectations as Blinkit accelerated store additions, particularly in smaller towns. It also highlighted management's guidance for broadly flattish near-term adjusted EBITDA margins for Zomato as it reinvests in growth.

CLSA made significant changes in its profit estimates for FY27-FY29 (38%-78% to FY27-29 PAT), reflecting the faster store rollout and higher marketing expenditure. It now expects Eternal to achieve steady-state profitability in FY29, compared with its earlier expectation of FY28. Brokerage CITI has initiated a ‘Buy’ coverage for Eternal stock with a share price target of Rs 385, while highlighting the company's increased investment commitment to quick commerce.

The brokerage noted that the company's top-line performance was slightly ahead of estimates, with food delivery NOV growing 21 percent YoY and quick commerce NOV rising 22 percent QoQ, compared with Citi's estimates of 20 percent for both the metrics. However, quick commerce adjusted EBITDA came in at Rs 180 crore, below Citi's estimates of Rs 260 crore, due to escalation in growth investments, including customer acquisition and dark stores.

Citi also highlighted the monthly transacting user (MTU) continued to accelerate in Q2 with Eternal adding 5.2 million users during the quarter, compared with 4.6 million in the first quarter of FY27 and an average of 3.4 million per quarter in FY26. Smaller towns and cities were a key driver of the increase. The brokerage said management was bullish about its competitive positioning, near-term growth prospects and the degree of discretion to balance expansion with profitability.