Eternal stock flat pre-earnings as investors weigh Blinkit margin pressure
Eternal shares ticked higher ahead of its quarterly earnings, but analysts warn that rich valuations leave little room for error as investors focus on quick commerce profitability.
Eternal shares rose as much as 0.63% to an intraday high of ₹289.20 on the NSE on Wednesday, ahead of the company's June quarter results scheduled for later today. The stock opened at ₹287.80, up marginally from Tuesday's close of ₹286.60.
The muted price action reflects a market that has already priced in sustained execution from the Indian consumer internet giant. With the stock trading at a premium, investors are looking past top-line expansion to scrutinize unit economics in a fiercely competitive quick commerce sector.
Brokerage firm Motilal Oswal forecasts strong operational metrics for the quarter. The firm expects net order value for the food delivery and quick commerce segments to grow 19.7% and 84.4% year-over-year, respectively. Blinkit's net order value is projected to rise 17.9% quarter-over-quarter and 84.4% year-over-year.
Margin improvement is also anticipated. “FD’s adj. EBITDA as a % of NOV margin may rise 60bp QoQ to 6.1%. Blinkit is likely to post a contribution margin of 5.2% and adj. EBITDA margin of 0.6% as a % of NOV in 1Q,” said Motilal Oswal.
However, structural headwinds threaten to offset these operational gains. Seema Srivastava, Senior Research Analyst at SMC Global Securities, pointed to the intense rivalry in the sector. “However, aggressive competition from Swiggy, Zepto and other players, continued investments in dark store expansion and elevated customer acquisition costs may keep margins under pressure,” Srivastava said.
This dynamic makes the stock a difficult trade immediately ahead of the print. Harshal Dasani, Business Head – INVasset PMS, noted that the market already discounts Blinkit’s leadership. “Our view remains constructive on the business but measured on the stock at current valuations. Investors should focus on Blinkit’s net order value growth, dark store productivity, EBITDA trajectory and the cash generation of the core food delivery business,” Dasani said.
“Staggered accumulation appears more prudent than chasing the stock immediately ahead of the results. The long-term opportunity remains intact, but at current valuations, execution needs to remain consistently ahead of expectations for the premium to sustain,” Dasani added.
Not all voices are cautious. Mahesh M Ojha, VP Research & Business Development at Kantilal Chhaganlal Securities, remains outright bullish. “The stock is also likely to benefit from anticipated MSCI inflows, which could provide an additional trigger. Experts recommend buying the stock in the ₹285–286 range, with a stop-loss at ₹268. On the upside, they see potential targets of ₹294, ₹304, and ₹320+,” Ojha said.
