Eternal Q2 Result Review: Brokerages Split On Zomato Parent Post Q2 Beat; Revenue Triples, Profit Slumps

Brokerages are mixed on Eternal Ltd., the parent company of Zomato, following its September quarter earnings. While Bank of America and UBS reiterated their bullish stance citing strong revenue growth and positive guidance, Macquarie remained cautious, flagging concerns over profitability and competitive pressures. Eternal's Q2 revenue surged nearly threefold to Rs 13,590 crore, beating analyst estimates, but net profit fell 63% year-on-year to Rs 65 crore due to higher inventory costs.

Eternal Q2FY26 Results (Consolidated, YoY)

Revenue at Rs 13,590 crore versus Rs 4,799 crore (Bloomberg estimate: Rs 8,665 crore)

EBITDA up 5.8% at Rs 239 crore versus Rs 226 crore (Estimate: Rs 236 crore)

Margin at 1.8% versus 4.7% (Estimate: 2.7%)

Profit down 63% at Rs 65 crore versus Rs 176 crore (Estimate: Rs 108 crore)

BofA On Eternal

• Reiterate Buy with target price of Rs 400

• Believe commentary from con-call was positive

• Believe QC losses slightly higher than most investor expectations

• Management expects to get to 2,100 stores by Dec'25 vs 2,000 earlier

• Consider this prudent strategy when competition not adding dark stores

• Reiterates Buy on favorable risk-reward

UBS On Eternal

• Maintain Buy with target price of Rs 400

• Strong numbers with positive guidance across segments

• QC NOV growth expected to be 100% for next 1-2 years

• Focus remains on growth, not immediate Ebitda breakeven

• NOV growth expected around 30% YoY

• Margins set to improve and losses to remain range-bound near term

Macquaire On Eternal

• Maintain Underperform with target price of 200

• Painted optimistic yet measured outlook in Sept-Q earnings call

• Constructive on TAM potential, but the face of rising competitive intensity

• Believe consensus overstates the turnaround and sustainability of profitability

• Fundamentals don't support US$40bn market cap (120x FY28 EV-Ebitda)

Emkay On Eternal

• Maintain Buy with revised target price of Rs 430 versus Rs 330 earlier

• Better-than-expected revenue growth with,

• Strong NOV growth in Quick Commerce

• Accelerated shift to owned inventory model

• Weaker QCom Ebitda offset stronger food delivery Ebitda

• Increase NOV growth expectations, while keeping long-term QCom margins at 5%

• Believe Blinkit well placed to capitalize on large long-term QCom opportunity

• Stock trades at expensive valuations (50 times FY28E EV/Ebitda)

• As QCom business still logging suboptimal profitability

Nuvama On Eternal

• Retain Buy with revised target price of Rs 400 versus Rs 320 earlier

• Healthy quarter with revenue above consensus estimate

• Ebitda margin at 1.8% was below consensus estimate of 2.7%

• Quick commerce losses reduction lower than expected due to higher marketing exp

• Tweaking FY26E/27E by -57%/-9% due to lower margin expectations in near team

• Management expects growth at 100% CAGR in Blinkit for next two year