Goldman Sachs has issued a buy rating on Eternal Ltd., the owner of Zomato and Blinkit, with a target price of Rs 350. The brokerage points to strong expected growth in food delivery and quick commerce for the first quarter of fiscal 2027. Investors are tracking how these units maintain margins despite intense competition in the delivery sector.
What Happened
Goldman Sachs has initiated coverage on Eternal Ltd., the parent company behind popular platforms Zomato and Blinkit, with a buy recommendation. The investment bank has set a target price of Rs 350 for the stock, projecting a potential upside of approximately 37% from current levels. The brokerage’s optimistic view is primarily driven by strong growth expectations for the company's food delivery and quick commerce divisions for the first quarter of fiscal year 2027 (Q1FY27).
Why Analysts Are Optimistic
The positive outlook from Goldman Sachs is based on the rapid growth of the quick commerce business, Blinkit. The brokerage expects Blinkit's net order value to grow by 85% compared to the same period last year. Furthermore, the report anticipates that Blinkit will improve its operating margins, projecting a rise of 30 basis points quarter-on-quarter. The food delivery segment is also expected to perform well, with projected order value growth of 20% year-on-year.
The brokerage also noted that Eternal Ltd.'s internal guidance for a three-year compounded annual growth rate of over 60% for Blinkit is more aggressive than their own estimate of 45%. This suggests that if the company hits its own targets, there could be a possibility of the stock being re-rated by the market.
Financial Context
For the fourth quarter of fiscal 2026, which ended on March 31, 2026, Eternal Ltd. reported a significant improvement in its financials. The company posted a consolidated net profit of Rs 174 crore, marking a 346% jump compared to the Rs 39 crore reported in the same quarter the previous year. Revenue from operations also saw a sharp increase, rising 196% year-on-year to Rs 17,292 crore. Operating margins for the company improved to 2.8% in the same quarter, up from 2.3% in the third quarter of fiscal 2026.
The Competitive Reality
While the growth outlook is strong, the quick commerce sector remains highly competitive. The company operates in a space where rivals like Swiggy Instamart and Zepto are also aggressively expanding their reach and market share. This high level of competition often leads to intense pressure on pricing and delivery fees. While Goldman Sachs noted that there is limited current evidence of Blinkit taking actions that would hurt its margins, the risk of competitive discounting or heavy marketing spending remains a constant factor for any company in this sector. Investors should remain aware that rapid expansion in this business model often comes with the risk of higher costs, which could impact overall profitability.
What Investors Should Track
The most important monitorable for investors will be the company’s ability to balance rapid growth with margin improvement. As the company expands into new cities and categories, the cost of customer acquisition and delivery logistics will be key factors to watch. Future updates on net order value growth, management’s commentary on competition, and the sustainability of profit margins across both the food delivery and quick commerce divisions will be crucial for understanding the company's long-term performance.