JM Financial, a domestic brokerage firm, has reaffirmed its ‘Buy’ recommendation for Eternal (formerly Zomato) and has set a revised target price of Rs 400 per share. This indicates a possible increase of more than 15 percent from the present market price of Rs 345.50.
The brokerage increased its target, referring to robust and enhancing trends throughout the company’s essential business verticals. In the October 8-dated note, it is emphasized that Eternal is “playing in a league of its own.”
The outstanding results of Eternal’s quick commerce division, Blinkit, are the main reason for the optimistic outlook. JM Financial is of the opinion that Blinkit will carry on with its “meaningful market share gains” in the near future.
An aggressive expansion of its supply chain supports this growth, with the report indicating that Blinkit is poised to add 200-250 dark stores each quarter. The brokerage observes that this swift investment in its network offers a competitive edge, particularly as competitors seem to be decelerating their expansion efforts in order to enhance profitability. Moreover, thanks to scale advantages and a transition to an inventory-led model, Blinkit is well-positioned to achieve “break-even in 3QFY26.”
Zomato observes in the food delivery segment that the growth of the Net Order Value (NOV) “seems to have bottomed out” following four quarters of decline. It foresees a quickening of the annual growth trends starting in the second quarter of FY26, aided by a less challenging base. JM Financial anticipates that food delivery margins will stay stable and fall within a “sustainable range of 5-6 percent as per cent of NOV”. The report indicates that the negative effect of reducing the Minimum Order Value (MOV) on subscription orders will probably be offset by a rise in platform fees.
JM Financial has updated its financial models to reflect these positive developments. For the FY26-28 period, it has increased its NOV estimates for Blinkit by around 7% to 20% and for Zomato by 1% to 5%.
FY26 EPS estimates were cut by roughly 18% due to greater investments, whereas FY27 and FY28 EPS estimates saw increases of 4-8%. The revised target price of Rs 400 is derived from a rolled-forward valuation and an increased target multiple of “80x NTM EPS (previously 75x)”. The brokerage wraps up with the statement, “we believe Eternal is likely to show improving trends in both of its key businesses in the near term”.
