Zomato platform fee hike: Elara retains Buy on Eternal, shares target price

Elara Securities on Monday retained its 'Buy' on Eternal Ltd (Erstwhile Zomato), saying  every Re 1 increase in platform fee should result in Zomato seeing a 26 basis points (bps) positive impact on the take rate and a 5 per cent rise in Ebitda. The brokerage suggested a target price of Rs 415 per share as it values food delivery business at 55 times EV/Ebitda, Blinkit at 5 times EV/gross profit and Hyper pure business at 3 times EV/sales. 

The comment comes as Eternal raised its platform fee by 20 per cent to Rs 15 per order, aligning it with Swiggy’s level. Elara said the increased fee of Rs 15 per order is currently at 3.1 per cent of food delivery's average order value (AOV) of Rs 475, which is not adequate to trigger any meaningful elasticity for consumers. Moreover, the platform fee is in line with its peer, Swiggy. 

Elara said platform fees have increased 7.5 times since their introduction in August 2023 (Rs 2 initially). Since then, Zomato has hiked them in almost every quarter, Elara said adding that the company data shows that a gradual increase in platform fees has not affected the gross order value (GOV ) growth rate, although the overall food industry slowdown dragged GOV growth during Q3FY25-Q2FY26.  

"In our base case (50 per cent market implementation at Rs 15), this adds 40 bps to the take rate and Rs 180 crore (7.5 per cent) to FY27E adjusted Ebitda. At 3.1 per cent of food delivery (FD) Average order value (AOV) of Rs 475, the fee remains too low to trigger demand elasticity, supported by Monthly transacting users (MTU) growth accelerating to 22 per cent in Q3FY26," Elara said. 

The brokerage said the move supports management's 5–6 per cent adjusted Ebitda to GOV target, saying the fee hike largely factored in its base case adjusted Ebitda margin estimates for FY27E. 

"Zomato’ s increased platform fee should not pose concern over order flows. Platform fee has been one of the triggers for adjusted Ebitda margin. Guidance of 5-6 per cent of adjusted net order value (NOV) band includes such platform fee hikes; We model a 40bps increase in adjusted Ebitda in FY27E, which broadly factors 50 per cent implementation of increased fees, however, a pan India implementation shall drive upgrade," Elara said. 

With the recent rebound in MTU growth, FD GOV growth momentum is set to sustain, it said. The platform fee hike could also provide a cushion to Ebitda margins in the event of a rise in fuel prices. EV penetration within gig workers remains low, at 10 per cent in food delivery and 20-25 per cent in quick commerce. 

"In such a scenario, companies may have to compensate gig workers for higher fuel costs. As per our assessment, every 10 per cent increase in fuel prices could have a negative impact of nearly Rs 90 crore (Re 1 per order, assuming
20-25 per cent is fuel cost and balance is Labour) on the food delivery Ebitda. Hence, the higher platform fee shall act as a partial hedge against such cost pressures going ahead," it said.