Eternal share price targets as Blinkit, Hyperpure turn Ebitda breakeven, Goyal resigns

Eternal Ltd Q3 results surprised analysts, as Blinkit and Hyperpure turned Ebitda breakeven much before estimates and Deepinder Goyal resigned as company CEO. Eternal's sales and Ebitda beat analyst estimates while profit came in line with expectations. Despite this, analysts believe the Ebitda respite will be short-lived and more pain is ahead. They maintained 'Buy' rating on the stock for now.

Goyal's move to step down is intended to avoid potential conflicts, as he invests in ventures outside Eternal while continuing to retain his existing responsibilities within Eternal, Nuvama said.

"Eternal delivered multiple surprises with Blinkit and Hyperpure achieving adjusted EBITDA breakeven much before estimates. Deepinder shall retain all responsibilities of CEO albeit without the title of CEO. We are changing FY26/27E EPS by 41 per cent/2.3 per cent due to higher-than-expected profitability. Maintain ‘Buy’ with a revised target price of Rs 430 (earlier Rs 400) as we roll forward estimates to FY28," Nuvama said.

MOFSL said its view of lower competitive intensity and cost focus in the industry has not played out. Contrary to earlier expectations, the risk is that the market leader could be drawn into a dogfight too, with lower minimum order values and higher discounts, it said. 

"We also note that Eternal has stopped reporting GOV and has moved to NOV reporting, which means that going forward we will not be able to ascertain the extent of discounting at Blinkit; this could point to slightly higher discounting intensity. We believe this will delay the path to profitability for Blinkit," it said. 

This brokerage lowered its target on Eternal to Rs 360 Rs 420 earlier.

The management cautioned that if irrational discounting persists, it may need to respond, and quarterly profitability is not guaranteed, Nirmal Bang Institutional Equities noted.This brokerage said aggressive dark store opening is counter-productive as it delays paybacks and pushes out the profitability path. Consequently, the target of 3,000 dark stores by March 2027 assumes irrationality but if it moderates, Blinkit can target 3,500-4,500 dark stores which would keep the net order value (NOV) growth to 100 per cent-plus growth rate. 

"It also means the 100 per cent growth rate trajectory is contingent upon competition. While this can be a bit of a overhang, investors are likely to appreciate profitable growth trajectory ahead with meaningful adjusted Ebitda kicking in rather than delivering Ebitda loss with superlative NOV growth," Nirmal Bang said.

This brokerage suggested a target price of Rs 355 on the stock.