Amid the latest changes in management, Deven Choksey, Managing Director at DRChoksey Investment, has raised concerns over Zomato parent Eternal's steep market capitalisation, questioning whether the company's current earnings profile justifies a valuation of nearly Rs 3 lakh crore, even as competition in quick commerce intensifies with the rise of JioMart.
Choksey in an interview with NDTV Profit pointed out that Eternal's reported profit of around Rs 100 crore offers little support for such a large market value. According to him, the existing profit base does not signal enough visibility to justify current valuations, and investors will need to wait and watch how the company's new revenue models eventually shape up.
"At this point, a ₹100 crore profit does not suggest anything meaningful to support a ₹3 lakh crore market cap,” he told NDTV Profit.
He further explained that to justify the current valuation, Eternal would need to generate between Rs 10,000 crore and Rs 12,000 crore in Ebitda profit. At present, the company's Ebitta stands at roughly Rs 400 crore, implying the need for a more than tenfold expansion. “To justify today's market capitalisation, you need earnings multiples of 25–30 times, but the question remains—where is that earnings visibility coming from? There is no clear area that currently justifies such valuation levels,” Choksey added.
Beyond valuation concerns, Choksey highlighted intensifying competition in the quick commerce space, with JioMart emerging as the “elephant in the room.” He cautioned that Reliance's retail arm deserves to be taken far more seriously than it currently is. Backed by the mightiest back bone and supported by its own FMCG brands, JioMart has built a powerful SKU ecosystem through its retail and FMCG businesses, which is now directly fuelling its quick commerce push.
According to Choksey, Reliance's FMCG business is growing at around 60%, and JioMart has already become a formidable number two player in quick commerce. Given the pace at which the segment is expanding, he believes JioMart is well-positioned to firmly entrench itself as the second-largest player, making competition significantly more intense for incumbents like Eternal.
Choksey also weighed in on recent management changes at Eternal, calling the resignation of the CEO inevitable. He said the former CEO's focus appeared to be shifting toward newer, unexplored areas such as aviation or healthcare, which created challenges for the company's core business.
He noted that Blinkit has now grown larger than Zepto in terms of scale, despite still being unprofitable. This, he believes, may explain why Blinkit's management has been given greater operational control. Going forward, Choksey expects Eternal to remain a strong second player in quick commerce, but stressed that execution will be key.
“Easier said than done,” Choksey cautioned, summing up the challenge ahead as Eternal seeks to balance valuation expectations, leadership changes and mounting competition from a rapidly strengthening JioMart.
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