Eternal Shares Soar 9% as Jefferies Adds Stock to India Model Portfolio, Labels it ‘FPI Favourite’
Eternal’s remarkable ascent continues as its shares surged by up to 9.3%, reaching a high of Rs 298.50 on the BSE. This boost followed Jefferies’ decision to incorporate the stock into its India model portfolio, replacing Godrej Consumer Products. Jefferies described Eternal as an FPI favourite, highlighting its robust growth and ongoing margin improvements in both quick commerce and food delivery.
Key Highlights Behind Eternal’s Growth
– Strategic Portfolio Addition: Jefferies added Eternal to its India model portfolio, indicative of growing investor confidence.
– Market Performance: The stock is currently trading 25% below its peak, suggesting an attractive risk-reward profile, according to Jefferies analyst Mahesh Nandurkar.
– Ambitious Target Price: Jefferies has set a street-high target price of Rs 480 per share for Eternal, signaling an anticipated upside of 75% from current levels.
– Revenue Growth Projections: The brokerage forecasts a 16% compound annual growth rate (CAGR) in food delivery revenue for FY25–28, supported by improving unit economics, operational leverage, and increasing consumer willingness to pay for convenience.
Valuation Insights for Eternal Shares
– Comprehensive Business Valuation: Jefferies values Eternal’s food delivery business at 40x adjusted EBITDA projected for March 2028, and quick commerce at 2.5x revenues for the same period.
– Earnings Snapshot: Eternal’s consolidated net profit surged by 73% year-on-year, reaching Rs 102 crore in Q3FY26, while revenues from operations skyrocketed by 202% YoY to Rs 16,315 crore.
Operational Improvements
Eternal’s performance has been bolstered by several key factors:
– Positive EBITDA: Blinkit reported positive earnings before interest, taxes, depreciation, and amortization (EBITDA) amidst heightened competition, attributed to improved average order values and strategic model shifts.
– Leadership Transition: The transition of leadership from Deepinder Goyal to Albinder Dhindsa is seen as a governance milestone, though Jefferies anticipates no immediate operational changes.
Conclusion
Eternal’s impressive share growth follows its endorsement by Jefferies as an FPI favourite, fueled by strong earnings, a compelling business strategy, and a forward-looking investment target. As the company continues to thrive in a competitive landscape, investors keen on the quick commerce and food delivery sectors might find Eternal’s stock an intriguing addition to their portfolios. With Jefferies predicting significant growth ahead, the outlook for Eternal shares remains optimistic.