Blinkit can break-even in Q4, says Nomura; raises Eternal target price

Shares of Eternal could rally as much as 12%, international brokerage Nomura said after raising the target price to Rs 370 per share, citing robust prospects for its quick commerce arm, Blinkit. Nomura has retained its Buy call on the stock.

The brokerage expects Blinkit to achieve adjusted EBITDA breakeven by the fourth quarter of FY26, marking a crucial milestone for the fast-growing but loss-making segment. It noted that the transition to an inventory-led model and aggressive store expansion are likely to support this turnaround.

The company has added more than 1,000 stores over the past five quarters and is on track to reach 2,000 outlets by December 2025. Blinkit’s management has also indicated plans to eventually expand to 3,000 stores.

The move to an inventory-led structure is estimated to expand margins by about 100 basis points if rolled out across the business. Nomura expects around 80% of gross order value to shift to this model, raising long-term contribution margin estimates to nearly 7%.

However, in the near term, Blinkit’s profitability growth will remain constrained as the company pares back marketing spends. Competitive intensity in the quick commerce segment also poses a risk, though Nomura sees category expansion as a long-term driver of growth.

Eternal’s food delivery business, anchored by Zomato, remains the company’s cash engine. Nomura expects industry growth to stabilize at 15–20% annually as Zomato and Swiggy cement their duopoly. Eternal’s food delivery gross order value is forecast to grow 16% in FY26 and 21% in FY27, with contribution margins improving to about 9%.

Nomura has shifted its valuation approach from a discounted cash flow model to a sum-of-the-parts framework, assigning 40 times FY28 EBITDA to food delivery and 1.2 times FY28 gross order value to quick commerce.

At about 10:25 am, shares of the company were trading at Rs 328, marginally lower by 0.3% from the previous close. Eternal’s stock has been on a strong run, rising 56% in the last six months.

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