- Revenue exploded from Rs 1.99 trn in 2021 to Rs 20.24 trn in 2025 – a ten‑fold jump.
- Net profit turned positive in 2025 after four years of losses, delivering Rs 527 cr.
- Margins are still thin but improving: gross profit margin now 8.5%, operating margin 4.2%.
- Valuation remains lofty – P/E at 336× – raising the question of price‑to‑earnings sustainability.
- Cash flow turned positive in operating activities in 2025, a rare sign of financial health.
You missed Eternal’s comeback because you were watching the headline price, not the fundamentals.
Eternal's Revenue Surge Mirrors Nifty 50 Growth Dynamics
From 2021 to 2025, Eternal’s top line grew from Rs 1,993.79 crore to Rs 20,243.00 crore, a CAGR of roughly 119%. The broader Nifty 50 index has been powered by digital transformation, renewable energy, and consumer tech, sectors where Eternal has deepened its footprint. This revenue acceleration is not an isolated miracle; it reflects a sector‑wide shift toward high‑margin services and recurring revenue models. Investors should map Eternal’s product mix to these macro trends to gauge the durability of the growth curve.
Margin Evolution: From Double‑Digit Losses to Positive Operating Income
In 2021, Eternal reported a gross profit margin of –17.17% and an operating margin of –24.08%, indicating severe cost inefficiencies. By March 2025, gross margin climbed to 8.46% and operating margin to 4.20%. While still modest, the swing signals that the company has trimmed excess inventory, optimized supply‑chain logistics, and renegotiated vendor contracts. For context, a healthy operating margin in the Indian mid‑cap sector typically sits between 6% and 12%; Eternal is now within striking distance, suggesting a potential upside as cost discipline continues.
Competitor Landscape: How Tata and Adani Are Reacting
Tata Group’s digital services arm posted a 9% YoY revenue rise in the same quarter, but its operating margin remains around 12%, indicating a more mature cost structure. Adani’s renewable segment is expanding faster, with a 15% revenue CAGR, yet its P/E sits above 500×, dwarfing Eternal’s already stretched valuation. The contrast highlights two pathways: chase scale (Adani) or chase efficiency (Tata). Eternal sits in the middle, offering investors a hybrid story – rapid top‑line growth with an emerging margin tailwind.
Historical Parallel: The 2018 Turnaround Play
Back in 2018, a peer in the telecom equipment space saw its stock plunge 3% after a quarterly loss, only to rebound over the next 18 months as it shifted from hardware sales to managed services. The EPS moved from –0.9 to +0.3, and the P/E compressed from 80× to 25× as earnings steadied. Eternal’s trajectory mirrors that pattern: a brief price dip followed by a earnings swing and eventual valuation rationalization. History suggests that disciplined investors who entered at the dip captured 150% upside within two years.
Key Ratio Deep‑Dive: What the Numbers Really Say
Return on Equity (ROE) jumped from –10.63% in 2021 to +1.73% in 2025, reflecting better capital deployment. Debt‑to‑Equity remains at 0.0, indicating a balance‑sheet free of leverage risk – a rarity among fast‑growing firms. Interest Coverage surged to 11.13×, meaning the firm can cover its interest obligations comfortably. However, the P/E ratio at 336× signals that the market is pricing in aggressive future earnings growth. Investors must decide whether they trust the forward‑looking narrative or prefer a more modest multiple.
Investor Playbook: Bull vs. Bear Cases for Eternal
Bull Case
- Revenue continues its >100% CAGR for at least two more quarters, driven by new SaaS contracts.
- Operating margin improves to 7%–9% as fixed costs become a smaller share of sales.
- Market re‑rates the stock, cutting the P/E to 150×, delivering a 40% price appreciation.
Bear Case
- Revenue growth slows to <10% YoY as competition intensifies, especially from Tata’s aggressive pricing.
- Margins remain thin, and operating losses re‑appear, eroding confidence.
- Valuation contracts further, pushing the P/E above 500×, causing the share price to slip below Rs 250.
Bottom line: Eternal’s 2.48% dip is a warning flag only if you ignore the underlying earnings turnaround. For the savvy investor, the dip offers a low‑cost entry into a company that is rewriting its profit story while sitting inside the Nifty 50 index. Align your exposure with your risk tolerance – whether you’re betting on the margin uplift or hedging against a potential slowdown, Eternal now presents a data‑driven narrative worth a second look.