Company Update : Eternal by Motilal Oswal Financial Services Ltd
Assessing the three growth engines
* In this note, we analyze three of Eternal's businesses: the recovering food delivery (FD) business, the quick commerce business, which continues to scale despite intensifying competition, and the nascent going-out business (District), whose potential we explore.
* The FD business, which had witnessed a slowdown, has now accelerated for the third consecutive quarter. The improvement is being driven by targeted activation of budget-conscious customers and curated affordable meal offerings (e.g. meals under INR250). While NAOV has moderated, higher order frequency and new customer additions are driving volume growth. We continue to view FD as a stable duopoly and expect growth to remain in the range of ~18-20% over the medium term. We expect GOV growth of 21.5% YoY in 1QFY27E and EBITDA margin of 5.0%.
* Quick commerce remains the bigger story. Competition is intense and growth has moderated from the exceptional pace of the last two years, with FY27 estimates now down to ~70% YoY growth (vs 85-100% earlier). Even so, Blinkit's position continues to strengthen. It has crossed adjusted EBITDA breakeven, mature markets are delivering 5-6% EBITDA margins, and newer cities are scaling with better-than-expected economics. Its dark store network is the largest in the industry, with resilient store productivity, retention, and unit economics despite intense competition. Near-term share may fluctuate, but we believe the category remains under-penetrated enough for growth to remain the primary value driver. We expect NOV growth of ~18% QoQ (85% YoY) and adjusted EBITDA margin of 0.6% in 1QFY27.
* Eternal is a play on the discerning, affluent urban consumer’s wallet share, and to this effect its bet on District deserves a look as well. We believe India's concert economy could grow 2–2.5x over the next five years (see our note dated 15th May 2026: Concerts in the District: How loud can it get), creating a meaningful long-term opportunity for District. While concerts will remain episodic and execution-intensive, successful scaling could add ~USD125m to Eternal's EBITDA by FY30.
* As shown in Exhibit 1, the current market price implies an EV/EBITDA multiple of just 24x on our Blinkit FY29 estimates, making this a lucrative long-term opportunity. Our TP is based on SOTP, valuing Food Delivery at 35x FY28E EV/EBITDA and Blinkit using a DCF. Our TP of INR380 implies a 34% upside from the current level. We reiterate our BUY rating on the stock
Food Delivery: Recovery led by execution rather than consumption alone
* FD’s NOV grew 16% YoY in FY26, with growth accelerating for the third consecutive quarter after bottoming out three quarters back. The recovery has been driven by deliberate product interventions, such as lower minimum order values for Gold members and a sharper focus on value-conscious consumers. Platform fee increases continue to support revenue per order, while profitability remains within management's guided range.
* For 1QFY27, we expect FD NOV growth of 19.7% YoY, with a 21.5% take rate and adjusted EBITDA margin (as a % of NOV) of 6.1%.
* We continue to view FD as a stable duopoly and model ~20% NOV growth over FY27-28E, with margins gradually moving toward the guided 5-6% range.
Valuation and view
* Eternal's FD business is stable with an improving trajectory, and Blinkit remains a generational opportunity in hyperlocal commerce despite near-term growth normalization. We expect PAT margin of 2.5%/3.0% for FY27/28.
* We continue to view FD as a stable duopoly with balanced market shares between Eternal and Swiggy. We model ~20% GOV growth over FY27–28 and assign a 35x EV/EBITDA multiple to the FD business, reflecting its steady margin trajectory and high user stickiness.
* While we estimate that QC growth is moderating at ~70% in FY27, we see this as a normalization, with improving unit economics and a clearer path to profitability. We factor in gradual margin expansion, led by store maturity and operating leverage.
* The company has guided for USD1b in adjusted EBITDA for the consol. business by FY29E. Our estimates imply ~USD500m for QC and ~425m from FD, the balance being contributed by going out/district/hyperpure. We continue to prefer Eternal and reiterate our BUY rating with a TP of INR380 (34% upside).
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