Eternal shares jump 2% after Q4 results. Should you buy, sell or hold?

Shares of Eternal (formerly Zomato) jumped 2.3% to their day’s high of Rs 237.90 on the BSE on Friday after the food delivery platform reported its Q4FY25 results. The company posted a 78% year-on-year (YoY) decline in net profit to Rs 39 crore for the March 2025 quarter. However, revenue from operations surged 64% YoY to Rs 5,833 crore.

The drop in the net profit was driven by a 68% YoY increase in total expenses, which rose to Rs 6,104 crore. The company attributed the higher costs to increased investments in its quick commerce vertical, Blinkit, as well as elevated infrastructure spending across segments.

Eternal’s core food delivery business remained stable, with GOV (Gross Order Value) of Rs 8,439 crore, up 6% sequentially. Adjusted EBITDA margin for the segment stood at 5.7%.

Quick commerce arm Blinkit saw a strong jump in business during Q4. Revenue rose 122% YoY to Rs 1,709 crore from Rs 769 crore a year earlier. The Net Order Value (NOV) increased 53% YoY and 19% quarter-on-quarter.

After the Q4 results, here’s what brokerages said:

Motilal Oswal: Buy| Target price: Rs 260

Domestic brokerage firm believes that Eternal’s food delivery business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery, and e-commerce. It has reduced its estimates for FY26E/27E by 52%/27%, driven by uncertainty arising from intense competition and the accelerated expansion of the dark store network. This expansion has led to reduced profitability due to increased investments.

Nomura: Buy| Target price: Rs 280

Nomura said that Zomato (Eternal), after USD1bn of QIP in Nov-24, has cash balance of Rs 18,800 crore as of end-4QFY25. The company is not burning cash at the EBITDA level (because of strong cash generation in core FD).

The foreign brokerage firm expects the food delivery business to deliver 17-% y-y growth in GOV in FY26F (vs 20% in FY25) with a contribution margin (CM) of 8.9% (vs 8% in FY25). For Blinkit, Nomura expects 125% YoY growth in GOV with a CM of 3.1% (-30bp y-y) and adj EBITDA margin (as % of GOV) of -0.9% (-120bp y-y).

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Nuvama: Buy| Target price: Rs 290

Eternal reported in line numbers in Q4FY25 with a revenue at Rs 58.3 billion (+7.9% QoQ/+63.8% YoY) against consensus estimate of Rs 58.2 billion. EBITDA margin came in at 1.2% (-180bp QoQ) below consensus estimate of 1.7%. PAT was Rs 390 million, in line with the estimate of Rs 421 million.

Blinkit reported lower-than-expected losses despite an accelerated pace of dark store additions in Q4. Notably, contribution margin improved, even with dilution from newly opened dark stores. With the store expansion cycle likely peaking, we are forecasting adjusted EBITDA losses shall decline from the next quarter.

Emkay Global: Buy| Target price: Rs 290

Eternal delivered broadly inline operating performance in Q4. Food Delivery GOV saw a decline of 1.4% QoQ, due to persistent sluggishness in the demand environment, temporary shortage of delivery partners owing to high demand in QC, and increased competition from packaged food delivery in QC. Blinkit maintained strong growth momentum with GOV growth of 20.8% QoQ. However, profitability sees a further cut, as EBITDAM as a % of GOV fell to -1.9% from -1.3% in Q3, due to higher customer acquisition cost on account of accelerated store openings (294 in Q4, its highest-ever net store addition) and heightened competitive intensity. Management target of reaching a 2,000 store-count by Dec-25 will keep the loss momentum sustained in the near term.

Eternal is focused on growing its market share, especially in the face of heightened competition, and to prioritize growth over profitability in the short term. Emkay expects the stock price to remain range-bound in the near term due to heightened competitive intensity in QC and planned investments in Going-out (to scale it up).

ICICI Securities: Buy| Target price: Rs 310

The company posted an adjusted EBITDA of Rs 0.7 billion in Q4FY25, beating estimates of Rs 0.1 billion. This was achieved by containing QC losses despite expanding dark stores and warehousing amid a seasonal dip in AOV. Gains were driven by a better mix, limited city expansion, and higher ad revenue. Management flagged rising non-QC competition and has begun reporting Net Order Value for pricing transparency. Food delivery growth issues were termed non-structural, with QC margins expected to improve from Q1FY26.

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