Eternal Q4 Review: Brokerages Largely Positive On Zomato Parent Despite Q4 Profit Miss

Eternal Ltd.'s fourth-quarter results for fiscal 2025 triggered a mix of relief and caution across brokerages as they filtered through performance across food delivery, quick commerce, and newer verticals. While the numbers were broadly in line with expectations, management commentary, especially on quick commerce competitiveness, drew negative outlooks.

Despite cuts to earnings or multiples, all brokerages retained a positive view. Citi, Nomura, and JPMorgan reiterated their 'buy' or 'overweight' calls, with target prices ranging from Rs 250 to Rs 290. Jefferies alone chose to "stay on the sidelines", even as it acknowledged that the quarter's result was better than anticipated.

Food Delivery Held Steady: Most firms noted that food delivery GOV growth of 16% was largely in line or slightly ahead of expectations, with Citi calling it "decent in the context of the reset in expectations".

Jefferies found it in line, and Nomura also had a similar outlook. JPMorgan noted it was "better than feared," especially in light of weak discretionary demand and rider shortages.

Contribution and adjusted Ebitda margins saw modest improvement across the board—up 10 basis points quarterly to 4.4%, as highlighted by Citi, Jefferies, and JPMorgan.

Quick Commerce Losses in Check: Despite ongoing cash burn, quick commerce losses came in better than expected, noted the brokerages.

Blinkit Market Position: All brokerages acknowledged Blinkit's aggressive store addition in the final quarter, taking the total count to 1,301. Jefferies called the user growth the "strongest pace ever," and Nomura reiterated Blinkit's focus on increasing store density in existing cities.

Competition Is Intensifying: Consensus emerged around the rising competitive heat in quick commerce. All four brokerages—Citi, Jefferies, JPMorgan, and Nomura—flagged this as a concern. Management's commentary spurred this caution, citing growing competition from slotted and next-day delivery players like Amazon and Flipkart.

Outlook: Citi and JPMorgan struck a more optimistic tone, expecting quick commerce profitability to improve sharply from the second half of the last fiscal and seeing Eternal as well-positioned in a large total addressable market.

Nomura echoed a similar sentiment in Eternal's ability to weather quick commerce competition. In contrast, Jefferies emphasised management's bearish commentary and chose to remain cautious, slashing its Ebitda estimates by 5%–15%.

Confidence In Timelines: Citi and JPMorgan remained bullish about a profitability ramp-up in the current fiscal, while Jefferies extended its loss expectations and Nomura warned that marketing spends would keep margins under pressure in fiscal 2026.

Non-Core Businesses: Jefferies and Citi highlighted losses particularly in Hyperpure and Going-Out. Citi reported losses rising to Rs 63 crore from Rs 16 crore on a quarterly basis, while Jefferies noted these were driven by investments in new initiatives like Bistro Café.

Citi noted Zomato’s shutdown of "Quick" (its 15-min food delivery), and Nomura added that "Everyday" (homely meals) had also been discontinued. Jefferies expressed surprise at the move, especially given Swiggy's ramp-up in similar segments.

The scrip fell as much as 5.36% to Rs 220.05 apiece, the lowest level since April 16, 2025. It pared losses to trade 1.35% higher at Rs 235.67 apiece, as of 9:36 a.m. This compares to a 0.75% advance in the NSE Nifty 50 Index.

It has declined 15.23% on a year-to-date basis and has fallen 2059% in the last 12 months. Total traded volume so far in the day stood at 0.45 times its 30-day average. The relative strength index was at 57.47.

Out of 30 analysts tracking the company, 24 maintain a 'buy' rating, two recommend a 'hold', and four suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 16%.