Eternal shares: 44% upside! What does a bull case for Zomato look like?

Goldman Sachs in a fresh note on Eternal Ltd (erstwhile Zomato) said Blinkit’s growth momentum remains strong and that its FY27 net order value (NOV) estimates are now tracking 80 per cent and 260 per cent higher than what it had expected 12 months and 24 months ago. 

With expectation of store count doubling over the next 2-3 years, the foreign brokerage believes Blinkit could see meaningful share expansion, a dynamic not fully being reflected in Zomato’s current share price. 

Goldman Sachs base case target for Eternal stands at Rs 360 against Rs 340 earlier, which hints at 10 per cent upside. Its bull case scenario suggests 44 per cent potential upside on the counter. 

Goldman Sachs said with a relatively stable competitive environment in recent months, deceleration in sequential store growth and Blinkit’s 1P transition, margins in this segment may expand 240 bps of NOV over the next two quarters, with Ebitda break-even for this segment by December 2025, a key catalyst for the stock. 

"Based on the high-frequency data available so far, we are expecting a YoY acceleration in NOV growth for both quick commerce and food delivery segments of Zomato in 2QFY26, with further upside risks to our estimates if such momentum were to sustain until end of the quarter," Goldman Sachs said.

In its base case, Goldman Sachs has incorporated Blinkit’s transition to 1P (inventory ownership), which does not impact like-for-like NOV estimates, but leads to meaningful increases in revenue estimates. 

"We do not raise our margin estimates and rather assume reinvestment in growth, translating into higher NOV estimates (by up to 8%). Additionally, we are further raising our food delivery NOV estimates by up to 3 per cent on the back of continued strength in food delivery MTUs, and expect Zomato’s food delivery NOV growth to approach 20% YoY by March 2026," Goldman Sachs said. 

Bull case scenario

In a bull case, it sees 44 per cent upside for Zomato over 12 months. 

"In our bull case, we assume food delivery growth and Going-out scale (and margins) in line with management guidance. Additionally, we model a larger quick commerce TAM in our bull case (with 20 per cent penetration vs 17 per cent in our base case), and Blinkit garnering a higher share of that TAM vs our base case," Goldman Sachs said. 

In the bull scenario, Goldman Sachs' FY30 EPS estimate is 30 per cent higher than its base case. The bull case quick commerce implied value is Rs 336 per share, broadly similar to Zomato’s current share price, with 10 per cent higher value for food delivery against the base case and Rs 26 per share value for other segments.

"In our bear case, we assume lower quick commerce penetration, with lower market share for Blinkit, along with margin pressures across segments. Our Rs 225 per share value in this scenario implies 31 per cent downside from current levels," Goldman Sachs said.