What should investors do with Eternal (Zomato) after Q2? Brokerages decode

Eternal (Zomato) reported its second quarter (Q2FY26) numbers on Thursday, during market hours. Post the results, analysts reckon that strong cash balances and a cash-generating food delivery business provide Eternal an advantage over other players in the quick commerce business.

 

At 9:15 AM, Eternal’s share price was down 1.81 per cent at ₹342.1 per share. In comparison, BSE Sensex was down 0.16 per cent at 83,331.78.

Eternal Q2 results: Key highlights

• Consolidated net profit tanked 63 per cent year-on-year (Y-o-Y) to ₹65 crore in Q2FY26, as against ₹176 crore.
• The company's revenue for the second quarter rose 183.1 per cent Y-o-Y to ₹13,590 crore, up from ₹4,799 crore.
• Adjusted earnings before interest, tax, depreciation, and amortisation (Ebitda) declined 32 per cent Y-o-Y to ₹224 crore, while increasing 30 per cent from ₹172 crore in Q1FY26.

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Brokerages' view on Eternal (Zomato) stock

Nomura has reiterated a ‘Buy’ call on Eternal with a target price of ₹370 per share, as it sees an advantage for the company over peers in the quick commerce business due to its strong cash balances of ₹18,300 crore and a cash-generating food delivery business. 

 

 

Further, Eternal noted that the recent goods and services tax (GST) rate cuts have brought down the GST rates by 3 per cent on its average orders for the Blinkit business. This should drive demand growth in the medium term. GST on delivery charges impacts 25 per cent of the orders where a delivery fee is charged to the customers. The GST rate increase does not impact either the platform fees charged to food delivery customers nor the delivery charges collected from quick commerce customers.

 

Emkay Global Financial Services has maintained ‘Buy’, but have increased the target to ₹430 per share from ₹330 earlier.

 

The brokerage believes the industry is in a ‘land grab’ phase, and Eternal should focus on market share rather than profitability. Blinkit is executing well on this front, and significantly superior unit economics and balance sheet versus peers allow it to invest in this growth and gain market share. 

 

Blinkit (quick commerce business) delivered a net order value (NOV) of ₹11,680 crore in Q2, up 137 per cent Y-o-Y, driven primarily by a 23 per cent sequential rise in monthly transacting users (MTU).

Its contribution margin (as a percentage of NOV) was at 4.6 per cent, 70 basis points (bps) quarter-on-quarter (Q-o-Q), largely driven by the change to an inventory-led model (80 per cent sales on the inventory-led model and will rise to 100 per cent in the next few quarters, as per the company).  ALSO READ | Zee Ent posts weak Q2; ad revenue dips for 6th straight qtr; buy or sell? 

“We increase our NOV growth expectations, while keeping long-term quick commerce margins at 5 per cent,” said Emkay.   Motilal Oswal has maitained 'Buy' with an unchanged target of ₹410 per share. Eternal’s market leadership in both quick commerce and food delivery and the long-term potential of Blinkit as a generational opportunity in retail, grocery, and e-commerce disruption. However, elevated investments in both Q-commerce and the going-out business are anticipated to constrain profitability in the short term, the brokerage noted.

 

Nuvama Institutional Equities has retained ‘Buy’ and hiked the target to ₹400 per share from ₹320. “We are tweaking FY26E/27E by -57 per cent/-9 per cent due to lower margin expectations in the near term, although faster-than-expected growth,” Nuvama said