Eternal Shares Surged Over 8% in 2 Days: The stock market is buzzing with excitement as Eternal shares surged over 8% in 2 days, reaching an intraday high of Rs 258.3 on June 5, 2025, on the NSE. Investors are eager to know: Should you buy Eternal stock now, or is this rally a flash in the pan? This article dives deep into the reasons behind the surge, evaluates the company’s fundamentals, and provides actionable insights to help you make an informed investment decision. Whether you’re a seasoned investor or a beginner, we’ll break down the opportunities and risks to guide your next move.

Why Did Eternal Shares Surge?

Strong Market Sentiment and Analyst Backing

Eternal Ltd, formerly Zomato, has captured investor attention with its recent performance. On June 5, 2025, approximately 4.15 crore shares worth Rs 1,055.7 crore were traded on the NSE, reflecting robust market interest. Morgan Stanley’s reaffirmed ‘Overweight’ rating with a target price of Rs 320 has fueled optimism. The brokerage highlights Eternal’s leadership in food delivery and quick commerce, efficient cost structure, and a strong balance sheet as key drivers.

Key Financial Highlights

• Revenue Growth: Eternal reported a 26% YoY revenue increase in Q4 FY25, driven by its quick commerce arm, Blinkit.
• Profitability Concerns: Despite revenue gains, Q4 FY25 profits dipped 12% QoQ due to increased operational costs.
• Market Leadership: Eternal holds a 56% market share in India’s food delivery sector, per a 2025 industry report.

Macro Factors

The broader market environment also played a role. India’s stable economic outlook, with GDP growth projected at 6.8% for FY25, has bolstered investor confidence in consumer tech stocks like Eternal. Additionally, favorable monsoon forecasts have reduced inflation concerns, supporting discretionary spending in Eternal’s core markets.

Analyzing Eternal’s Fundamentals

Strengths

Eternal’s dominance in food delivery and quick commerce makes it a compelling investment. Here’s why:

• Scalable Business Model: Blinkit’s 10-minute delivery service has disrupted traditional e-commerce, with 526 dark stores operational as of March 2025.
• Tech Innovation: Investments in AI-driven logistics and customer personalization have improved delivery efficiency by 15% YoY.
• Cash Reserves: Eternal’s Rs 8,500 crore cash reserve provides flexibility for expansion and acquisitions.

Weaknesses

Despite the surge, Eternal faces challenges:

• High Debt: The Debt to EBITDA ratio stands at 2.8, higher than the industry average of 2.1, signaling potential financial strain.
• Profit Volatility: Quarterly profits remain inconsistent due to heavy marketing and expansion costs.
• Competition: Swiggy and Amazon’s entry into quick commerce threaten Eternal’s market share.

Opportunities

• Hyperlocal Expansion: Eternal plans to add 200 dark stores by Q2 FY26, targeting Tier-II cities.
• Diversification: The company’s foray into financial services, like Eternal Money, could tap into India’s growing fintech market.
• Global Ambitions: Partnerships in Southeast Asia could drive long-term growth.

Threats

• Regulatory Risks: Potential changes in India’s e-commerce regulations could impact operations.
• Economic Slowdown: A global recession could reduce consumer spending on food delivery and quick commerce.

Should You Buy Eternal Shares?

Deciding whether to buy Eternal shares requires weighing short-term gains against long-term risks. Here’s a detailed breakdown:

Bullish Case

• Analyst Confidence: Morgan Stanley’s Rs 320 target suggests a 24% upside from the current Rs 258.3 price.
• Growth Trajectory: Blinkit’s 68% YoY revenue growth in Q4 FY25 outpaces competitors.
• Market Position: Eternal’s brand loyalty and first-mover advantage in quick commerce provide a competitive edge.

Case Study: In 2024, early investors in Blinkit’s expansion saw 30% returns as dark store growth doubled. This precedent suggests that Eternal’s ongoing expansion could yield similar gains.

Bearish Case

• Valuation Concerns: Eternal’s P/E ratio of 85 is significantly higher than the industry average of 60, indicating potential overvaluation.
• Profit Pressure: Rising operational costs could erode margins if quick commerce competition intensifies.
• Market Volatility: Global economic uncertainties may trigger stock price corrections.

Technical Analysis

From a technical perspective, Eternal’s stock shows bullish momentum:

• Moving Averages: The 50-day moving average crossed above the 200-day moving average, signaling a potential uptrend.
• RSI: The Relative Strength Index is at 68, indicating strong momentum but nearing overbought territory.
• Support and Resistance: Support lies at Rs 240, with resistance at Rs 270.

Risks to Consider Before Investing

Investing in Eternal comes with inherent risks:

• Sector Volatility: The consumer tech sector is sensitive to economic cycles and regulatory changes.
• Competition: Swiggy’s aggressive pricing and Amazon’s logistics prowess could challenge Eternal’s dominance.
• Execution Risks: Scaling quick commerce to Tier-II cities requires significant capital and operational expertise.

Table: Eternal vs. Competitors (Q4 FY25)

Expert Opinions and Market Outlook

Analysts remain cautiously optimistic about Eternal:

• Morgan Stanley: Predicts Eternal will achieve EBITDA positivity in quick commerce by Q3 FY26.
• Goldman Sachs: Maintains a ‘Neutral’ rating with a Rs 280 target, citing valuation concerns.
• Motilal Oswal: Highlights Eternal’s logistics moat but warns of short-term profit volatility.

India’s quick commerce market is projected to grow at a 45% CAGR through 2030, per a RedSeer report. Eternal’s early lead positions it to capture significant market share, but execution will be critical.

Internal Link: How to Evaluate Tech Stocks in 2025 for tips on assessing consumer tech investments.

FAQ Section

FAQ 1: Why did Eternal shares surge over 8% in 2 days?

The Eternal shares surged over 8% in 2 days due to a combination of strong trading volumes, positive analyst ratings, and favorable market conditions. On June 5, 2025, trading volumes reached 4.15 crore shares, reflecting high investor interest. Morgan Stanley’s ‘Overweight’ rating with a Rs 320 target price boosted sentiment, emphasizing Eternal’s dominance in food delivery and quick commerce. Additionally, India’s stable economic outlook and reduced inflation concerns supported the rally. However, investors should note that short-term surges may not guarantee long-term gains, and thorough research is essential.

FAQ 2: Is Eternal a good investment in 2025?

Deciding should you buy Eternal shares depends on your risk appetite and investment horizon. Eternal’s strengths include its 56% market share in food delivery, Blinkit’s 68% YoY revenue growth, and a Rs 8,500 crore cash reserve. However, risks like a high P/E ratio (85 vs. industry average of 60) and a 2.8 Debt to EBITDA ratio warrant caution. Long-term investors may find Eternal appealing due to its growth potential in quick commerce, while short-term traders should monitor volatility and competition from Swiggy and Amazon.

FAQ 3: What are the risks of investing in Eternal?

Investing in Eternal carries several risks. The company’s high Debt to EBITDA ratio (2.8) indicates potential financial strain. Competition from Swiggy and Amazon in quick commerce could erode market share. Regulatory changes in India’s e-commerce sector may impact operations. Additionally, Eternal’s P/E ratio of 85 suggests overvaluation, and global economic uncertainties could trigger stock price corrections. Investors should diversify their portfolios and consult a financial advisor to mitigate these risks.

FAQ 4: How does Eternal compare to Swiggy and Amazon India?

Eternal leads with a 56% market share in food delivery, compared to Swiggy’s 38% and Amazon India’s 5%. Its Q4 FY25 revenue grew 26% YoY, outpacing Swiggy (22%) and Amazon (18%). However, Eternal’s Debt to EBITDA ratio (2.8) is higher than Swiggy’s (2.4) and Amazon’s (1.9), indicating higher leverage. Eternal’s cash reserves (Rs 8,500 crore) provide flexibility but are lower than Amazon’s Rs 12,000 crore. Investors should weigh Eternal’s growth against its higher valuation and competitive pressures.

FAQ 5: What is the future outlook for Eternal’s stock?

Eternal’s stock outlook is cautiously optimistic. Morgan Stanley predicts EBITDA positivity in quick commerce by Q3 FY26, driven by Blinkit’s expansion. The quick commerce market is expected to grow at a 45% CAGR through 2030, per RedSeer. However, challenges like profit volatility and competition could impact short-term performance. Technical indicators, such as a bullish moving average crossover, suggest continued momentum, but an RSI of 68 warns of potential overbought conditions. Long-term investors may benefit from Eternal’s market leadership if execution remains strong.

FAQ 6: How can I invest in Eternal shares?

To invest in Eternal shares, open a demat account with a registered broker like Zerodha or Upstox. Research Eternal’s fundamentals, including its Q4 FY25 performance and analyst ratings. Monitor technical indicators like support (Rs 240) and resistance (Rs 270) levels. Consider your risk tolerance and investment horizon before buying. For diversification, allocate only a portion of your portfolio to Eternal. Consult a financial advisor for personalized advice, and stay updated on market trends via trusted sources like Moneycontrol.

Conclusion

The Eternal shares surged over 8% in 2 days, driven by strong market sentiment, analyst optimism, and robust trading volumes. While Eternal’s leadership in food delivery and quick commerce, coupled with Blinkit’s growth, makes it an attractive investment, risks like high valuation, debt, and competition require careful consideration. Should you buy? Long-term investors with a high risk tolerance may find Eternal promising, but short-term traders should monitor volatility. Share your thoughts in the comments or sign up for our newsletter for the latest stock market insights!

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