ICICI Direct Initiates Coverage on Buy Eternal with Target Price of Rs 360
Eternal Posts Strong Quarterly Growth, Beats Estimates
Eternal, a leading quick commerce (QC) player, has reported impressive growth in its November quarter (NOV), surpassing consensus estimates in both growth and margin delivery. The company's improving outlook for the first quarter of fiscal year 2027 (Q1FY27) suggests that the trend is likely to continue.
According to ICICI Direct's research report, Eternal's QC NOV growth and margin delivery both beat consensus estimates. The report highlights that the company is expected to benefit from an inflationary environment from mid-May 2026, which is likely to boost growth rates further. In the medium term, management has guided for QC NOV to grow at a compound annual growth rate (CAGR) of approximately 60% and consolidated adjusted earnings before interest, taxes, depreciation, and amortization (consol. adj. EBITDA) to reach USD 1 billion by fiscal year 2029 (FY29E).
The company's growth is expected to be driven by a combination of factors, including better assortment, expanding presence beyond its top-8 cities, and improving demand density in the next 7 cities after Delhi NCR. In addition, food delivery (FD) growth continued to accelerate, driven by improving affordability, with a 10 basis points (bps) quarter-over-quarter (QoQ) EBITDA margin uptick.
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| Category | Q4FY26 | Q4FY26 | QoQ | YTD Growth |
|---|---|---|---|---|
| QC MTU Share | ||||
| QC MTU | ||||
| FD MTU Share | ||||
| FD MTU | ||||
| QC NOV Growth | ||||
| FD Growth |
Note: The table above shows the growth in Monthly Transacting Users (MTU) share and MTU for QC and FD, as well as the growth rates for QC NOV and FD.
We note that QC overtook FD in Monthly Transacting Users (MTU) share for the first time in Q4FY26. Additionally, going out grew sequentially, with margin expansion despite adverse seasonality. In light of these developments, we reiterate our BUY recommendation for Eternal.
Recommendation
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We maintain a BUY rating for Eternal with a three-stage discounted cash flow (DCF)-based unchanged target price of INR 360.
Investor Takeaway
Investors should maintain a BUY rating on Eternal with a target price of Rs 360.
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