Eternal shares jump over 20% in one month. Will the stock cross its October peak of Rs 368?

After months of consolidation and weakness, Eternal shares are showing signs of a potential turnaround. The stock came under pressure amid frothy valuations and concerns around the prospects of quick commerce, falling to a 52-week low of Rs 212 in March this year.

However, a promising start to FY27 sparked a sharp rebound, with the stock rallying 10% in just two sessions and about 21% in the last month. Despite the recent gains, the food delivery major trades 20% below its October peak of Rs 368 per share, based on the previous closing price.

Even after the correction, most analysts have largely maintained their bullish stance on the stock and continue to point to robust growth levers that could support Eternal's performance in the coming quarters.

What are experts saying?

International brokerage Jefferies says the first quarter reinforced the importance of quality growth over simply chasing market share. Food delivery growth accelerated alongside better-than-expected profitability, while quick commerce performance was positive despite falling short of optimistic forecasts.

Also read:Will Blinkit growth sustain amid competition? 5 things to know from Eternal's shareholder letter

The key takeaway for the brokerage was management's increasing confidence that competitive intensity in quick commerce has become predictable and that value-led food delivery is unsustainable. Blinkit does not favour a short-term discounting strategy, and management indicated that it is comfortable with the possibility of the broader market growing faster as a result. Jefferies analysts have pegged the target price at Rs 415.

Eternal now expects Blinkit's steady-state EBITDA margin to reach 6% of NOV, compared with its earlier estimate of 5-6%, driven by efficiencies from larger stores and warehouses, deeper assortments and better working capital management. The company expects net working capital days to decline from 18 days to 12 days in the steady state.

Zomato’s top bull, CLSA retained its High Conviction Outperform rating on Eternal with a target price of Rs 506 (65% upside), saying the company's 1QFY27 results reinforced its view of strong execution. Both quick commerce and food delivery saw growth accelerate, while profitability improved despite elevated competition.

Blinkit reported faster NOV growth along with greater confidence around profitability and cash generation. Zomato's growth accelerated to its fastest pace in six quarters, with limited impact from emerging no-commission platforms. Meanwhile, newer businesses such as District and Bistro continue to expand the ecosystem and drive customer engagement.

Management guided towards the higher end of its long-term margin range, with a reported EBIT margin of around 4% and adjusted EBITDA margin of around 6%, compared with the earlier guidance range of 5-6%.

This came despite the near-term increase in take rates not yet translating into contribution margin gains, which management attributed to minimum wage increases across several states and the opening of larger stores. With the business model now established and competition becoming more predictable, management expects structurally higher margins going forward.

Motilal Oswal maintained its positive view on Eternal with a target price of Rs 400, implying 41% upside. Motilal Oswal noted that continued elevated competition could affect near-term gains, but viewed the guidance upgrade positively. The brokerage said management's long-term target of 60% NOV growth and an EBITDA target of $1 billion by FY29 appear increasingly achievable, with its estimates continuing to factor in this long-term trajectory.

Read more: Eternal Q1 Results: Cons PAT skyrockets 268% YoY to Rs 92 crore; revenue zooms 182%

Should you Buy Eternal shares now?

Hitesh Tailor, Technical Research Analyst at Choice Broking, said Eternal is showing a steadily improving technical structure on the daily chart after forming a bullish Golden Crossover, signalling a positive shift in its medium-term trend. He said the stock found support near its 20-Day EMA following a healthy pullback and has since resumed its upward move, reflecting sustained buying interest at lower levels.

Tailor noted that the stock is currently trading around Rs 306 and testing the key Rs 305-315 resistance zone. A decisive breakout above this range could pave the way for the next leg of the uptrend. On the downside, immediate support is placed in the Rs 280-270 zone, backed by the 20-Day EMA and recent swing support. He added that the broader technical outlook remains constructive with a positive bias as long as the stock holds above this support range. The RSI at 69.12 indicates strong bullish momentum, although it is nearing the overbought territory.

Virat Jagad, Senior Technical Research Analyst at Bonanza, said Eternal has witnessed a strong two-day rally, confirming a decisive breakout above the long-term falling trendline around Rs 300. The move has been accompanied by robust volumes, with the stock sustaining above all key moving averages. He said the RSI near 69 points to healthy buying interest, although the stock is approaching the overbought zone.

Jagad said the positive trend is likely to remain intact as long as Eternal holds above the immediate support levels of Rs 290 and Rs 284. On the upside, Rs 310 is the immediate resistance, and a sustained move above this level could extend the rally towards Rs 320-325 in the coming sessions.

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