After a 17% fall, Goldman Sachs says Eternal is a buy —here's why

Shares of Eternal Ltd rose more than 3 per cent in intraday trade on Friday after global brokerage Goldman Sachs reiterated its ‘buy’ rating on the stock, citing that the recent correction appears overdone.

Stock extends gains for third straight session

On the NSE, Eternal climbed as much as 3.3 per cent to Rs 292.90, marking its third consecutive session of gains. Despite the recent uptick, the stock has declined about 17 percent over the past three months, even as benchmark indices gained around 3 percent during the same period.

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Goldman Sachs disagrees with bearishness priced in

The rally followed Goldman Sachs reaffirming its positive stance on the company, stating that it disagrees with the extent of bearishness being priced into the stock. Eternal is the parent company of Zomato, India’s leading food delivery platform, and Blinkit, its quick-commerce arm.

While maintaining its ‘buy’ recommendation’, the brokerage cut its 12-month price target to Rs 375 from Rs 390, implying an upside of about 33 percent from current levels.

What triggered the recent stock correction

Goldman Sachs noted that the 14.6 percent sell-off during the October–December quarter, compared with a 6.2 percent rise in the Nifty 50, reflected investor concerns around heightened competition and expectations of a near-term slowdown in quick commerce growth, particularly for Blinkit.

Valuations attractive despite competition worries

The brokerage said Blinkit’s implied EV/EBITDA multiple of 14x on FY30E normalised margins is at the lower end of the India internet peer group, despite its superior growth profile.

Goldman Sachs expects Eternal’s EBITDA to grow at over 50 percent year-on-year at least until FY30E, adding that its internal growth estimates remain below management guidance.

In a bull-case scenario, the brokerage sees up to 73 percent upside, while downside in a bear case is estimated at around 22 percent, highlighting a favourable risk-reward profile.

Recent stock performance

At last count, Eternal shares were trading at Rs 284.70, up 7.6 percent over the past six months, though the stock remains slightly negative on a one-month basis.

Eternal Q2FY26 result highlights

The operator of food delivery platform Zomato and its quick-commerce arm Blinkit, Eternal on October 16, reported a sharp a 183 per cent year-on-year jump in consolidated revenue to Rs 13,590 crore for the quarter ended September 30, beating analysts' expectations. However, its net profit declined 63 per cent to Rs 65 crore, much worse than what the Street had anticipated.

Sequentially, revenue nearly doubled from Rs 7,167 crore in Q1 FY26, while profit after tax (PAT) rose from Rs 25 crore. Eternal’s Q2 FY26 results delivered a mixed performance compared with Zee Business estimates. Revenue was expected to be Rs 8,584 crore, EBITDA Rs 237 crore, PAT Rs 126 crore, and margin 2.8 per cent. The mounting costs of advertising, sales promotion, and delivery hurt the margins. The decline in profitability was also indicative of the consequence of the latest takeovers and the swift extension of Blinkit's dark store network.

Total expenses for the Gurugram-based company rose 188 per cent YoY to Rs 13,813 crore. Advertising and sales promotion costs nearly doubled to Rs 806 crore, while delivery-related expenses rose marginally to Rs 2,213 crore.