Why is Nomura bullish on Eternal? 3 key factors for ₹370 stock target

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After Motilal Oswal’s recent reiteration of its bullish stance on Eternal, foreign brokerage Nomura has also turned more optimistic on the food delivery and quick commerce major, lifting its target price to ₹370 from ₹300 while retaining its ‘Buy’ rating. 

 

The revised call factors in stronger growth visibility in food delivery, a margin-accretive shift in quick commerce, and a change in valuation methodology.

 

On the bourses, Eternal shares have advanced 4 per cent over the past five sessions, 9 per cent in the last month, and a little over 28 per cent in the past three months.

 

Food Delivery: A steady growth engine

 

Nomura believes Eternal’s food delivery (FD) business has reached a stage of stable and profitable growth. The brokerage noted that with a “firm duopoly” between Eternal and Swiggy, industry dynamics have become disciplined, ensuring sustainable profitability.

 

Over the past few years, FD profitability has steadily improved, aided by scale benefits. 

 

Nomura analysts expect Eternal’s FD gross order value (GOV) to grow 16 per cent in FY26 and 21 per cent in FY27. Contribution margins (CM) are also forecast to expand by 60 basis points (bp) to 8.6 per cent in FY26 and a further 40bp to 9 per cent in FY27. The business remains a strong cash generator, giving Eternal a steady earnings base.  Track Stock Market LIVE Updates 

Quick Commerce: Margins to expand with inventory-led model

 

Blinkit, Eternal’s quick commerce (QC) arm, is undergoing a structural shift that could drive long-term margin gains, analysts opined. The platform has added over 1,000 stores in the past five quarters, with another ~500 expected by December 2025, taking the total to 2,000. Management has also guided for a potential scale-up to 3,000 stores.

 

Notably, Blinkit plans to transition to an inventory-led model over the next 2-3 quarters after becoming an Indian-owned and controlled company (IOCC). Analysts at Nomura estimate this shift could add ~100bp to margins once fully implemented, albeit with higher working capital days (rising from 5 to 18). Around 80 per cent of GOV is expected to transition under this model, prompting Nomura to raise its long-term CM estimate for QC by ~60bp to 6.9 per cent. The brokerage expects Blinkit to turn adjusted Ebitda break-even by Q4FY26.

 

That said, Nomura flagged competitive intensity as a key risk, which could limit margin gains if rival spending escalates.

 

Valuation reset

 

Nomura has also revised its valuation framework, moving from a discounted cash flow (DCF) model to a sum-of-the-parts (SOTP) approach. 

 

The brokerage has now assigned 40x FY28 EV/Ebitda to Eternal’s FD business and 1.2x EV/GOV to QC, which implies a ~25x multiple on a steady-state adjusted Ebitda margin of ~5.2 per cent. This methodology, combined with stronger growth and profitability expectations, underpins the new target price of ₹370.

 

Apart from that, Nomura cautioned that “a slowdown in the core online food delivery business and heightened competition in quick commerce” remain the biggest risks to its bullish thesis.