Kotak Institutional Equities has reiterated its 'Buy' rating on Eternal, even as the brokerage flagged rising competitive pressures in the quick-commerce (QC) segment where Blinkit operates. The brokerage has revised its fair value to Rs 375 from Rs 410 earlier, citing expectations of slower growth and continued price competition in the quick-commerce market. The stock was trading around Rs 243, implying significant upside from current levels.
Kotak said competition in the QC segment remains intense, with players such as Zepto, Amazon Now and Flipkart Minutes aggressively expanding and competing on pricing.
While Blinkit continues to hold the largest market share and strong unit economics, the brokerage expects sustained competitive pressure to affect growth and profitability in the near term.
Blinkit Holding Ground on Pricing
Despite the intense competition, Kotak's channel checks suggest Blinkit has largely maintained its pricing discipline, though it may need to respond to rivals in select cases. The brokerage noted that competitors appear to be the most aggressive on pricing, often using cashback offers and discounts to attract users.
Several platforms have also introduced minimum order values for free delivery, including Zepto and Amazon Now at around Rs 149, and Flipkart Minutes at about Rs 99. Kotak said earlier expectations of pricing rationalisation have not yet materialised.
Rivals are expanding product offerings while also offering free deliveries on many orders and deep discounts, keeping pricing discipline under pressure across the industry.
Growth Expectations Moderated
Kotak has moderated its growth assumptions for Blinkit, modelling slower net order value (NOV) growth in the coming years. The brokerage expects Blinkit's dark store network to expand to around 2,200 locations by FY26, implying an addition of nearly 900 stores during the year.
It also expects the network to grow to about 3,100 dark stores by FY27, supported by larger store formats and expansion into new markets. However, Kotak now projects 70% NOV growth for FY27 and FY28, slower than earlier estimates, reflecting the impact of increased competition and market share pressures.
Despite near-term challenges, Kotak said its long-term investment thesis on Eternal remains intact. The brokerage believes that the current phase of aggressive discounting across the quick-commerce sector is unlikely to be sustainable over the long run, as several competitors are operating with significant cash burn.
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