Dolat retains Sell on Eternal, sees nearly 30% downside despite Blinkit-led Q1 revenue beat

Dolat Capital kept its Sell call on Eternal with a ₹200 target price versus a ₹284 market price, citing weak profitability, elevated costs and sustained investment as Blinkit expands amid intense quick-commerce competition.

— Source publishedThu, 23 Jul, 2026, 07:03 IST·First seen Thu, 23 Jul, 2026, 07:28 IST·Source NDTV Profit

What happened

Dolat Capital retained a Sell rating on Eternal despite a Q1 revenue beat led by Blinkit. It cited weak profitability, higher costs and continued investment

Key facts

  • Dolat Capital retained Sell rating
  • Target price: Rs 200
  • Current market price: Rs 284
  • Implied downside: nearly 30%
  • Q1 EBIT: Rs 48 crore
  • Revenue CAGR forecast: 45.4% for FY27-FY30E
  • Revenue CAGR forecast: about 14% for FY30-FY40E
  • Average EBIT margin forecast: about 4% for FY27-FY40E
  • Cost of capital assumption: about 11%
  • Terminal growth rate assumption: about 3%
  • Target valuation: about 84 times FY28E earnings

Why this matters

Eternal’s willingness to sustain heavy Blinkit investment signals that scale and consolidation remain strategic priorities, but weak profitability may constrain deal flexibility.

What to watch

  • Blinkit quarterly GOV growth decelerates while adjusted EBITDA losses widen.
  • Dark-store expansion materially exceeds management's prior pace or capital-spending expectations.
  • Contribution margin improvement stalls because of elevated customer acquisition, delivery or inventory costs.
  • Competitors announce major fundraising, aggressive city expansion or deeper promotional campaigns.
  • Management provides a clearer and earlier timeline for Blinkit EBITDA breakeven.
  • Advertising revenue, order density and average order value rise enough to offset expansion-related cost growth.
  • Track Blinkit's quarterly adjusted EBITDA loss, contribution margin and loss per order rather than headline revenue growth.
  • Monitor dark-store additions, mature-store productivity and capex intensity for evidence that expansion is diluting returns.
  • Compare discounting, delivery fees and assortment expansion at Blinkit, Zepto, Swiggy Instamart and newer entrants.
  • Watch whether Eternal increases investment guidance, which could pressure consolidated profitability and free cash flow.
  • Assess any market-price correction toward the ₹200 target as a potential sign that investors are repricing long-dated profitability assumptions.