Leading brokerages have reiterated a positive outlook on Eternal Ltd (formerly Zomato) after the company’s board approved a move to cap foreign ownership at 49.5%, aiming to retain its Indian-owned and controlled company status. Analysts believe this strategic shift may pave the way for operational flexibility, particularly in its quick commerce (QC) arm Blinkit, and aid long-term margin expansion.
Morgan Stanley maintained its ‘Overweight’ rating on the stock with a target price of ₹330, stating that while the foreign cap may increase capital intensity, the move enhances Eternal’s business moat and could be offset by potential margin improvements. The brokerage believes this transition supports Eternal’s regulatory positioning and long-term growth story.
CLSA, which carries a High Conviction Outperform rating on the stock with a target of ₹375, emphasized that the company is now seeking shareholder approval through remote e-voting (between April 20 and May 19) for the proposed foreign ownership ceiling. CLSA believes the cap solidifies Eternal’s eligibility as an Indian-owned entity, a key regulatory advantage in its operating environment.
Jefferies, with a Buy rating and a target price of ₹255, noted that this move might allow Blinkit to adopt a 1P (owned inventory) model, though near-term ROI upside could be limited. The brokerage also raised caution around potential implications on MSCI index weightings and flagged uncertainties regarding compliance if foreign ownership breaches the cap during the transition.
ICICI Securities (ISEC) maintained a Buy call with a target price of ₹315, seeing the development as a step toward greater control over the QC value chain. ISEC estimates that the adjusted EBITDA margins in quick commerce could improve by 100–150 basis points over 1–2 years, contingent upon the depth of SKU migration to inventory-led operations. The move may require ₹10–20 billion in working capital, but this remains manageable given Eternal’s ₹190 billion cash reserves.
At the time of these reports, Eternal shares were trading at ₹214.55, indicating strong upside potential in the view of multiple analysts.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
