Emkay Global Financial’s research report on ETERNAL
Eternal delivered broadly inline operating performance in Q4. Revenue grew 7.9% QoQ, better than our estimate, led by Quick Commerce (QC) and Hyperpure. Food Delivery GOV saw a decline of 1.4% QoQ, due to persistent sluggishness in the demand environment, temporary shortage of delivery partners owing to high demand in QC, and increased competition from packaged food delivery in QC. Blinkit maintained strong growth momentum with GOV growth of 20.8% QoQ. However, profitability sees a further cut, as EBITDAM as a % of GOV fell to -1.9% from -1.3% in Q3, due to higher customer acquisition cost on account of accelerated store openings (294 in Q4, its highest-ever net store addition) and heightened competitive intensity. Management target of reaching a 2,000 store-count by Dec-25 will keep the loss momentum sustained in the near term. Eternal is focused on growing its market share, especially in the face of heightened competition, and to prioritize growth over profitability in the short term.
Outlook
We expect the stock price to remain range-bound in the near term due to heightened competitive intensity in QC and planned investments in Going-out (to scale it up). We retain BUY and Mar-27E DCF-based TP of Rs 290.
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ETERNAL- 02052025 – emkay
