Eternal's stock hinges on delivering robust guidance amid growth push

Eternal reported modest Q4 growth but strong guidance, with execution on Blinkit expansion and margins seen as crucial for sustaining stock performance

In the fourth quarter of financial year 2026 (Q4FY26), Eternal reported modest sequential growth with strong guidance. Revenue at ₹17,290 crore was up 6 per cent quarter-on-quarter (Q-o-Q ) and 196.5 per cent year-on-year (Y-o-Y). While, Ebitda margin at 2.8 per cent, was up 50 basis points (bps) Q-o-Q, and PAT came in at ₹174 crore. For FY26, revenue grew 168 per cent Y-o-Y, adjusted Ebitda jumped 89 per cent, while PAT declined 30 per cent Y-o-Y.

 

Management expects Blinkit’s growth to be meaningfully stronger sequentially in Q1FY27. Guidance claims Blinkit’s net order value (NOV) will grow at over 60 per cent compounded annual growth rate (CAGR) over the next three years, as the margin will move above 3 per cent. At consolidated level, management guided for a target of $1 billion adjusted Ebitda by FY29, with Ebitda margin gradually rising to 6 per cent of NOV.

 

Food delivery NOV stood at ₹9,760 crore, down 0.9 per cent Q-o-Q and up 18.8 per cent Y-o-Y, with Monthly Transacting Customer (MTC) addition of 0.5 million Q-o-Q, taking the total base to 25.4 million. Demand trends remained broadly unaffected by LPG shortage. Revenue per order continues to improve and operating cost efficiencies have kept pace.

 

Contribution margin was 10.2 per cent, down 20 bps Q-o-Q, while adjusted Ebitda margin as per cent of NOV increased to 5.5 per cent, up 10 bps Q-o-Q . Management reiterated long-term NOV growth guidance of over 20 per cent, with the margin to remain in 5-6 per cent range.

 

Blinkit’s NOV increased to ₹14,390 crore, up 8.2 per cent Q-o-Q and 95.4 per cent Y-o-Y, driven by MTC which has doubled Y-o-Y. Dark store addition was at 216 versus 211 last quarter, taking the total to 2,243 stores. Contribution margin decreased to 5.4 per cent, down 10 bps Q-o-Q and adjusted Ebitda margin as share of NOV improved 30 bps Q-o-Q to 0.3 per cent.

 

Management focus remains on achieving growth, while following pricing discipline. Hyperpure revenue declined 8.6 per cent Q-o-Q and 46.8 per cent Y-o-Y to ₹980 crore, while Ebitda was at ₹5 crore. Going-out NOV was up 46 per cent Y-o-Y and revenue rose 21 per cent Y-o-Y, however, while losses narrowed down sequentially to ₹81 crore from ₹121 crore in the previous quarter, it was higher than year-ago loss of ₹47 crore. Over the next three years, Hyperpure could reach $1 billion in topline, with 4-5 per cent adjusted Ebitda margin (about ₹450 crore annual profit).

 

Management confidence on 60 per cent CAGR guidance is based on a strategy of assortment expansion, densifying in existing cities and expanding into newer geographies. Management expects food delivery growth to be 20 per cent, while profitability should improve.

 

Some incremental revenue may be reinvested into gig worker welfare and delivery cost, capping near-term margins. Management's $1 billion Ebitda target by FY29 implies that Blinkit NOV CAGR could be 18 per cent during the next two years, driven by store additions and MTC growth, with quick commerce Ebitda margin to reach 2.5 per cent of NOV by FY28 -- improving from negative 0.6 per cent. This may be optimistic if competitive intensity remains high.

 

In food delivery, management retained GOV growth target at 18–20 per cent, along with improved margin. A guidance of Ebitda margin as a percentage of NOV at 6 per cent over next two years, implies revenue CAGR of 17 per cent and Ebitda CAGR (FY26-28) of 24 per cent. Margin expansion would be gradual while restaurant commission rates remain stable.

 

In quick commerce, a 60 per cent target implies NOV CAGR of 72 per cent. There is upside potential to this estimate if competition cools or quick commerce accelerates in smaller towns. Blinkit would also grab significant market share if it meets guidance. Key monitorables would include the rate of adoption in non-metro markets and rate of store additions. Higher margins are possible, but competitive intensity creates a ceiling unless competition normalises.

 

While growth is moderating off a high base, management commentary suggests demand is still building with no saturation. Food delivery growth has accelerated for three consecutive quarters. Metro markets are hitting 5-6 per cent Ebitda margin with 10–11 per cent contribution margins. While analyst consensus is positive, target prices have been cut by many analysts.

 

According to Bloomberg, 29 of the 32 analysts polled post Q4 results are bullish, while remaining three are bearish. Their average one-year target price is ₹351 compared to Wednesday’s closing price of about ₹253.50.