Motilal Oswal Ups Target Price for Buy Recommendation on Eternal to Rs 340

Eternal Reports Strong Quarterly Results, Beats Estimates

Eternal, a prominent food delivery and online marketplace company, has released its fourth quarter (4Q) fiscal year 2026 (FY26) results, exceeding market expectations. The company reported a net revenue of INR172 billion, representing a 6% quarter-over-quarter (QoQ) and 196% year-over-year (YoY) growth. This surpasses the research firm Motilal Oswal's estimate of 0.3% QoQ/181% YoY growth.

Breaking down the revenue streams, Food delivery (FD) in November (NOV) contributed INR97.6 billion, outpacing Motilal Oswal's estimate of INR96.4 billion. On the other hand, Blinkit, a key component of Eternal's business, reported NOV revenue of INR143.8 billion, a significant 96% YoY increase. Although this fell short of the research firm's estimate of INR146 billion, it still demonstrated remarkable growth.

A closer look at the company's adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin reveals a notable trend. For Food delivery, the adjusted EBITDA margin as a percentage of NOV was up 10 basis points (bp) QoQ, reaching 5.5%. This is lower than the estimated 6.1% margin, but still a positive development.

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Looking Ahead: Gradual Margin Expansion and Strong Growth Prospects

Motilal Oswal forecasts a gradual expansion of Eternal's margins, driven by store maturity and operating leverage. The research firm expects the company to report a PAT (Profit After Tax) margin of 2.4%/3.0% in FY27/28E. This positive outlook is reflected in the research firm's target price (TP) of INR340, implying a 34% upside from the current market level. In light of these factors, Motilal Oswal reiterates its BUY rating on the stock.