Leadership Jitters and Valuation Concerns Weigh on Eternal, Yet Consumption Shows Green Shoots
ETMarkets.com – As we enter early 2026, foreign institutional investors have increasingly become net sellers, raising concerns around the recent fluctuations in Eternal’s stock. Investor anxiety stems from leadership changes within the company, prompting a reevaluation of valuations. Despite these challenges, optimism around quick commerce remains, reflecting a complex yet evolving landscape.
Market Pressure on Eternal’s Valuation
– Foreign Selling: Continued net selling by foreign institutional investors has escalated since the start of 2026.
– Leadership Changes: Shares of Eternal have seen significant downturns due to concerns regarding transitions in leadership.
– Valuation Reevaluation: The market is reassessing stock values in the wake of these changes, even though earlier growth expectations had spurred a sharp rally.
Market expert Sandip Sabharwal addressed the implications of the “Deepinder Goyal shock” during a recent ET Now interview, drawing parallels with historic leadership transitions that unsettled investors.
– Historical Precedents: “This situation is reminiscent of when Elon Musk moved from Tesla to work with President Trump; the stock faced a substantial decline because leadership is pivotal,” Sabharwal commented.
– Post-Results Sentiment: Despite bullish analyst projections following the latest financial results, the stock has plummeted, suggesting a fundamental misalignment between earnings expectations and the current valuation.
Quick Commerce: A Double-Edged Sword
Eternal’s valuation heavily hinges on quick commerce, a sector characterized by its potential for rapid growth alongside high competition and volatility.
– Competitive Landscape: Sabharwal pointed out that, while Eternal has performed well by exceeding loss expectations, the competitive nature of quick commerce necessitates caution.
– Earnings Sensitivity: Quick commerce profitability can shift dramatically with minor alterations in growth metrics, he emphasized. Any slowdown could lead to significant earnings declines.
Outlook on Pricing and Investor Sentiment
– Valuation Benchmarks: Sabharwal suggested that for investors to consider buying again, the stock could require a drop to 120–150, referencing historical valuation norms.
– Broader Consumption Trends: In contrast to the situation at Eternal, Sabharwal highlighted a positive trend in the wider consumption space, with FMCG companies showing resilient numbers despite challenges.
The Macro Ecosystem and Foreign Selling Impact
Looking at broader market dynamics, Sabharwal noted the importance of new trade agreements.
– EU Trade Deal: The recently announced EU trade deal should be welcomed, although its implementation may take time, contingent on ratification across EU states.
– Impact of Foreign Investors: The continued, substantial selling pressure from foreign investors—approximately ₹4,000–5,000 crore daily—remains a significant barrier to market growth.
In conclusion, while leadership jitters and valuation concerns continue to loom over Eternal, emerging positive trends in consumption and the broader market landscape suggest possible recovery paths. Analysts highlight the need for leadership clarity and an attractive valuation to restore investor confidence fully. Balancing these factors will be essential as the company navigates its challenges.