You missed Eternal's latest rally, and you might be leaving money on the table.
- Jefferies adds Eternal to its India model, replacing Godrej Consumer Products.
- Stock surged 9.3% to a high of Rs 298.50, still 25% below its peak.
- Target price of Rs 480 implies ~75% upside from current levels.
- Food‑delivery revenue projected to grow 16% CAGR FY25‑28; quick‑commerce margins improving.
- Q3 FY25 net profit jumped 73% YoY, with adjusted EBITDA up 28% YoY.
Why Jefferies' Upgrade Supercharges Eternal's Valuation
Jefferies labeled Eternal an “FPI favourite” after spotting strong top‑line growth and steady margin expansion in both its quick‑commerce and food‑delivery arms. The broker’s note highlighted that the stock trades about 25% off its all‑time high, creating a risk‑reward profile that is hard to ignore. By setting a street‑high target of Rs 480, Jefferies is essentially betting that the market has under‑priced Eternal’s future cash‑flow generation.
Key to the upgrade is the valuation methodology: food‑delivery is priced at 40× March 2028E adjusted EBITDA, quick‑commerce at 2.5× March 2028E revenue, and the “Going‑Out” segment at 1.5× gross order value (GOV). Those multiples are aggressive by Indian standards but justified by the company’s operating leverage and the secular shift toward convenience.
Sector Momentum: Quick‑Commerce and Food Delivery in India
India’s quick‑commerce market is exploding, driven by a burgeoning middle class, expanding internet penetration, and a cultural tilt toward instant gratification. The sector is projected to grow at a double‑digit CAGR through 2028, outpacing traditional retail. Food‑delivery, while maturing, still has room for upside as urban consumers increasingly substitute home‑cooked meals with on‑demand options.
Regulatory reforms, such as relaxed foreign direct investment caps in e‑commerce logistics, are also unlocking capital for players that can scale quickly. This macro backdrop aligns perfectly with Eternal’s dual‑track strategy: a high‑velocity quick‑commerce network complemented by a robust food‑delivery platform.
Competitive Landscape: How Tata, Zomato, and Blinkit Stack Up
Peers are jostling for market share. Tata’s Digital arm is leveraging its logistics backbone to enter quick‑commerce, while Zomato continues to dominate food‑delivery with a diversified restaurant portfolio. Blinkit, a pure quick‑commerce player, recently posted positive EBITDA, showcasing that scale can deliver profitability even in a price‑sensitive market.
What sets Eternal apart is its hybrid model. By integrating quick‑commerce with food‑delivery, it can cross‑sell, optimize last‑mile costs, and increase average order value (AOV). The recent CEO transition—from Deepinder Goyal to Albinder Dhindsa—adds a governance upgrade without disrupting execution, a subtle but important differentiator for institutional investors.
Financial Deep‑Dive: Earnings, Margins, and Growth Projections
Eternal’s Q3 FY25 results are eye‑catching. Consolidated net profit surged 73% YoY to Rs 102 crore, while adjusted EBITDA rose 28% YoY to Rs 364 crore. Revenue from operations exploded 202% YoY to Rs 16,315 crore, reflecting a 20% sequential jump.
The B2C net order value (NOV) hit Rs 25,732 crore, crossing the Rs 1 lakh crore annualised threshold—a clear sign of scale. Food‑delivery NOV grew 17% YoY and 4.5% QoQ, marking the second consecutive quarter of acceleration after a trough in Q1 FY26.
Jefferies forecasts a 16% CAGR in food‑delivery revenue through FY28, driven by operating leverage (fixed costs spread over a larger order base) and cost efficiencies from a shift toward a 1‑party (1P) model. The quick‑commerce side is expected to benefit from higher AOV and better mix, further compressing unit economics.
Technical Metrics Explained: EBITDA, GOV, and Operating Leverage
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) measures a company’s core profitability, stripping out financing and accounting effects. A 40× EBITDA multiple suggests investors are pricing in strong future cash flows.
GOV (Gross Order Value) captures the total value of orders before discounts and cancellations. Valuing the “Going‑Out” segment at 1.5× GOV reflects confidence in its margin potential.
Operating leverage occurs when fixed costs remain stable while revenue grows, amplifying profit margins. Eternal’s expanding order base is a textbook example of this dynamic, allowing each additional order to contribute more to the bottom line.
Investor Playbook: Bull and Bear Cases
Bull Case: The stock trades at a discount to its implied valuation, and the company continues to capture market share in two high‑growth verticals. If food‑delivery revenue compounds at 16% CAGR and quick‑commerce margins improve as projected, the Rs 480 target (75% upside) becomes realistic. Institutional inflows, driven by Jefferies’ endorsement, could further lift the share price.
Bear Case: Intense price competition could erode margins, especially if new entrants intensify discount wars. A slowdown in consumer discretionary spend or supply‑chain disruptions could also delay the projected operating leverage benefits. In such a scenario, the stock could revert to its historic valuation range, limiting upside to under 30%.
Bottom line: Eternal sits at the intersection of two secular growth stories, backed by a valuation that offers a compelling risk‑reward trade. For investors willing to navigate short‑term volatility, the upside potential is hard to dismiss.