Zomato parent Eternal Ltd posted a decent performance for the March quarter, with Food delivery (FD) segment's numbers coming in line with expectations, but growth for quick commerce (QC) segment slowing a bit, as the focus remained on chasing healthy and meaningful growth over unhealthy growth, led by Blinkit’s rapid expansion in the underpenetrated markets, and increase in assortment, coupled with improving profitability. 

The Eternal management is expecting above 60 per cent net order value (NOV) growth compounded annually ahead, implying over 4 times growth in 3 years with gradual move towards steady-state margins of 5 per cent. Analysts said the food delivery continued to anchor profitability with stable 5 per cent margins and steady growth. 

That said, high competitive intensity remained the core monitorable that may have an impact on near-term growth and margins, said Nirmal Bang Institutional Equities, as it suggested 'Buy' and a target price of Rs 334 on the stock, suggesting 34 per cent potential upside.

Eternal said it was aiming for $1 billion adjusted Ebitda by FY29. Nomura India has lowered its target price on Eternal to Rs 340 from Rs 380 to factor in a slower net order value (NOV) growth rate in the QC business. A key risk to its call is lower profitability in QC for an extended period, the foreign brokerage said. 

Eternal expects $1 billion adjusted Ebitda in the consumer business by FY29, which is lower than Nomura's estimates and Bloomberg consensus. It said disciplined execution and focus on profitability can help the company achieve its target.

MOFSL said Eternal’s FD business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery, and e-commerce. 

"We largely keep our estimates unchanged. While QC growth is moderating at 70 per cent in FY27, we see this as a normalisation, with improving unit economics and a clearer path to profitability. Eternal should report a PAT margin of 2.4 per cent/3 per cent in FY27/28E. Our target of Rs 340 implies a 34 per cent upside from the current level. We reiterate our BUY rating on the stock," MOFSL said.

Nuvama said it continued to value the Food delivery business at 40 times adjusted Ebitda and quick commerce at 50 times adjusted Ebitda on FY28, arriving at a target price of Rs 380. 

"At consolidated level, management guided to achieve $1 billion adjusted Ebitda by FY29E. We tweak FY27E/28E EBITDA by 10 per cent, factoring in higher competition in QC. Maintain ‘BUY’ with revised target of Rs 380 (earlier Rs 430)," it said.