4 reasons why Morgan Stanley believes Eternal shares can rally up to Rs 320

With Q4 earnings and the limited risk of further equity dilution already priced in, global brokerage Morgan Stanley has reiterated its bullish stance on Eternal (formerly Zomato), naming it its top pick in the food delivery and quick commerce space, with a target price of Rs 320 on the stock.

The target price reflects the company’s market leadership, strong balance sheet, favorable risk-reward profile, and improved cost structure.

In its report, Morgan Stanley said: “We think Eternal offers (a) market leadership in both food delivery and quick commerce; (b) a superior cost structure driving healthy unit economics versus peers; (c) a stronger balance sheet than peers, limiting the risk of further equity dilution; and (d) favorable risk-reward – with a potential floor at Rs 200–220.”

The brokerage also revised its long-term outlook for the Quick Commerce (QC) segment, projecting India’s QC Total Addressable Market (TAM) to reach US$57 billion by 2030, up from its earlier estimate of $42 billion.

This upgrade is driven by faster-than-expected customer additions, growing city-level adoption, and a positive surprise in QC Gross Order Value (GOV), leading Morgan Stanley to believe that the overall TAM will expand, supported by broader city and household/MTU penetration by 2030.

In terms of financials, Morgan Stanley maintained its assumptions for the food delivery business over FY26–FY28 but raised margin estimates for the segment. It noted that the category has seen strong investments below the contribution margin line, which are expected to translate into improved operating leverage.The brokerage also increased its QC GOV assumptions by 9–11% for FY26–28, citing the growing industry TAM and adjusted EBITDA loss margins peaking in Q4. As a result, it now projects higher adjusted EBITDA for FY26.However, the report also cautioned that due to intense competition, margin improvement is expected to be more gradual, with gains more likely to materialize in FY27E and FY28E adjusted EBITDA.

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Morgan Stanley reaffirmed its view that Eternal is well-positioned to dominate a large profit pool in the medium term, adding that “we have made no material changes to FY31 estimates.”

The firm also outlined several near-term catalysts for the stock, including sustained or improved QC GOV growth and steady enhancement in food delivery unit economics, driven by both better monetization on the customer side and greater absorption of fixed costs.

Additionally, it highlighted the stabilization or non-worsening of competitive dynamics over the next 3–6 months, which could potentially lead to a re-rating of the entire segment, including Eternal.

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Importantly, Morgan Stanley sees a potential floor at Rs 200–220 by March 2026.

As of around 2 p.m. today, shares of Eternal were trading flat at Rs 240.05 on BSE.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)