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Eternal shares bounce 9% from day's low post Q4 show; is the worst over?
At 12 noon, Eternal shares were trading 1.8 per cent higher on the BSE compared to the stock's previous closing price, at ₹235.3 per share. The BSE Sensex, on the other hand, was quoting around 300 points (0.36 per cent) higher.
Why did Eternal share price rise today?
Shares of Eternal recouped morning losses after most analysts maintained their 'Buy' rating on the stock after the Deepinder Goyal-led company reported its financial results for the March 2025 quarter (Q4FY25).
Though they believe Eternal's profitability could stay under pressure in the near-term as the company is focused on capturing better market share, especially in the face of heightened competition, and prioritising growth over earnings, the worst could be behind the company after the April-June quarter of the current financial year (Q1FY26). This, they said, put the company on a long-term growth runway.
Eternal Q4 results snapshot:
During Q4FY25, Eternal reported an 8-per cent quarter-on-quarter (Q-o-Q) and 63.8 per cent year-on-year (Y-o-Y) rise in revenue at ₹5,833 crore.
Segment-wise, Blinkit's gross order value (GOV) increased 20 per cent Q-o-Q/134 per cent Y-o-Y, while the food delivery business' GOV climbed 16 per cent Y-o-Y/down 1.4 per cent Q-o-Q.
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Hyperpure revenue grew 10.1 per cent Q-o-Q/93.5 per cent Y-o-Y to ₹1,840 crore, and Going-out GOV/Revenue grew 104 per cent/146 per cent Y-o-Y on a reported basis.
On the margin front, food delivery segment's contribution margin rose to 8.6 per cent from 8.5 per cent in Q3FY25, whereas adjusted Ebitda (earnings before interest, tax, depreciation, and amortisation) margin as percentage of GOV improved 10 basis points Q-o-Q to 4.4 per cent.
Further, while Blinkit's contribution margin improved 10bps Q-o-Q to 3.1 per cent in Q4FY25, its adjusted Ebitda margin (as % of GOV) fell 60bp Q-o-Q to -1.9 per cent, hit by higher marketing investments aimed at accelerating new customer acquisition.
Overall, consolidated adjusted Ebitda fell 42.1 per cent Q-o-Q and 14.9 per cent Y-o-Y to ₹170 crore, adjusted Ebitda margin (as a percentage of adjusted revenue) contracted to 2.7 per cent (down 229bp Q-o-Q/234bps Y-o-Y), and net profit plunged 77.71 per cent Y-o-Y to ₹39 crore. ALSO READ | Indus Towers shares tumble 7% as Q4 profit dips; results breakdown here
Will Eternal (Zomato) shares rise now? Time to buy? Brokerages answer:
Nuvama Institutional Equities | Buy | Target: ₹290
The brokerage liked that Blinkit reported lower-than-expected losses despite an accelerated pace of dark store additions in Q4FY25. The segment's contribution margin also improved, even with dilution from newly opened dark stores. With the store expansion cycle likely peaking, the brokerage expects adjusted Ebitda losses to decline from the next quarter.
ICICI Securities | Buy | Target: ₹310
The brokerage highlighted that Eternal posted better-than-expected adjusted Ebitda profitability in Q4FY25 on the back of contained quick commerce (QC) losses despite adding 294 dark stores and 1 million sq. ft. warehousing space. Moreover, this was possible in a quarter, with a seasonally lower AOV (down 5.9 per cent Q-o-Q), due to better mix; limiting expansion to new cities; and sustained improvement in ad revenues.
While the management has cautioned about rising competition from non-QC channels, the brokerage believes QC margin will likely improve from Q1FY26.
JM Financial Institutional Securities | Buy | Target: ₹280
Analysts at JM Financial suggest investors to use any dip in the stock, due to the management's cautious tone amid rise in competitive pressures over the near term, to build sizeable position in Eternal. It expects Blinkit to materially slowdown expansion of warehousing capacity and dark stores from Q2FY26 onwards, which should lead to meaningful operating leverage benefit and likely peaking-out of its losses in Q1FY26. Further upside to margins can come, as and when the business starts to move to an inventory led model, it added. ALSO READ | PNB Housing surges 8% after block deal; this shareholder exits company
Eternal shares: Word of caution
Analysts at Motilal Oswal Financial Services have cut their earnings estimates for FY26E/27E by ~52 per cent/27 per cent, driven by uncertainty arising from intense competition in the QC business and the accelerated expansion of the dark store network.
The brokerage expects adjusted Ebitda to likely remain under pressure through FY26 as the company defends its market share and expands in the space. It has pushed back its profitability assumptions further, expecting Blinkit to just break even only in FY27.
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