Motilal Oswal has maintained a positive outlook on Eternal, forecasting a target price of Rs 380 per share. The brokerage points to a sustained recovery in the food delivery business and resilient growth in quick commerce. Investors are now evaluating how the company's focus on affordable meal options and its new 'going-out' segment will impact long-term profitability in a competitive market.
Motilal Oswal Securities has issued a report maintaining a positive view on Eternal, estimating a potential target price of Rs 380 per share. The brokerage's assessment is based on the company’s performance across its core delivery operations and its expanding business initiatives. For investors, understanding the underlying drivers of this growth—specifically the shift in consumer behavior and competitive positioning—is essential for evaluating the company's future.
Food Delivery Segment Recovery
The food delivery business, which had previously faced a period of slower momentum, has shown consistent growth over the last three quarters. The company has focused on capturing price-conscious consumers by introducing meal options priced under Rs 250. While this strategy has resulted in a lower average net order value, the company has offset this by increasing order frequency and acquiring a higher number of new customers. The brokerage expects this strategy to maintain volume growth in the range of 18% to 20% over the medium term. For the first quarter of fiscal year 2027, analysts are modeling a year-on-year increase in Gross Order Value of 21.5% and an operating profit margin of 5.0%.
Quick Commerce and New Ventures
Beyond traditional food delivery, the company’s quick commerce arm continues to demonstrate resilience despite an increasingly competitive landscape. This segment remains a focal point for investors as the company attempts to balance rapid delivery expectations with unit economics. Additionally, the company has entered the 'going-out' segment under the brand name 'District.' While this is currently a nascent venture, it represents the company's effort to diversify its revenue streams beyond its core delivery businesses. The success of this expansion will depend on the company's ability to compete with established players in the dining and entertainment discovery space.
Valuation and Market Risks
The target price of Rs 380 is based on a sum-of-the-parts valuation, which individually assesses the food delivery business and the quick commerce segment. Investors should note that valuations in the delivery sector are often sensitive to shifts in consumer spending and rising competition. Any failure to maintain profit margins or a slowdown in the adoption of the 'District' platform could impact future performance. Furthermore, while the brokerage highlights a stable duopoly in the food delivery market, persistent price wars or a rise in delivery personnel costs remain factors that could pressure margins. Moving forward, the key items for investors to track will be the actual profit margin outcomes in the upcoming quarterly reports, the user adoption rates of the 'District' platform, and whether the company can maintain its volume growth without significantly increasing its capital spending.