Brokerage firm Emkay Global Financial has initiated a 'buy' rating on Eternal with a price target of Rs 420. The report highlights strong growth in the company's quick commerce division and an aggressive store expansion plan for its Blinkit brand. Investors are focusing on the company's ability to scale store counts and improve unit economics in the competitive delivery market.
Emkay Global Financial has initiated coverage on Eternal with a target price of Rs 420, citing optimism about the firm's growth in the quick commerce segment. The brokerage noted that the business is showing strong momentum, with the quick commerce division recording accelerated growth for five consecutive quarters. In the second quarter of the 2027 fiscal year, the company reported a 22.2% sequential growth rate in this segment, up from 19.1% in the prior quarter. Additionally, the food delivery business remains a key contributor, with adjusted EBITDA growing 24.7% year-over-year to reach Rs 6.27 billion.
Blinkit Expansion and Retail Strategy
A central pillar of the brokerage's positive outlook is the performance of the Blinkit brand. The company added 308 new stores during the latest quarter, increasing its total retail footprint to 2,751 locations. Management has raised its strategic targets, aiming for more than 3,500 stores by March 2027 and further expanding to 5,000 stores by March 2028. This rapid scale-up is viewed as a critical step to improving unit economics and solidifying the company's presence in India's highly competitive delivery sector. While the overall margin figures saw a slight sequential moderation, the brokerage believes the aggressive rollout is necessary to capture market share.
Risks and Future Monitorables
While the outlook is positive, the brokerage has adopted a neutral stance on the company's newly announced 'dark.ai' privacy-first AI assistant. Analysts cited a current lack of visibility regarding how this tool will be monetized and the potential costs associated with the necessary infrastructure. For investors, the company's expansion strategy carries inherent risks. While scaling is intended to drive efficiencies, such aggressive growth can strain cash flow and profit margins if demand does not grow in line with the increased store count. Investors will likely monitor the company’s ability to manage these costs while facing stiff competition from players like Swiggy and Zepto, as well as the progress of its store expansion against its stated timeline.