Eternal shares zoom 24% YTD to fresh highs: Can this breakneck rally continue?

Deepinder Goyal-led Eternal (earlier Zomato) has been on a steady climb, gaining nearly 24% year-to-date (YTD). This rise has helped the food delivery-to-quick commerce giant hit fresh record highs in the Indian stock market, making it more valuable than a host of other prominent companies like Adani Power, Hindustan Aeronautics, Titan, Tata Motors and NTPC.

Eternal shares, which have been in an uptrend for the last six months, including September, have seen multiple tailwinds, ranging from strong financials, growing dominance in the quick commerce (QCom) space and a rise in discretionary spending.

What's working in Eternal's favour?

According to estimates from Motilal Oswal Financial Services (MOSL), food delivery (FD) growth slowed due to weak consumption and macro pressures, but could accelerate beyond 20% in the next 2-4 quarters, driven by the upcoming festive season, as well as a spur from the recent GST reforms.

Moreover, it believes that the quick commerce (QC) industry is transitioning from the land-grab phase to a more cost-conscious operating model.

Between September 2024 and April 2025, customer acquisition costs and dark store expansion peaked as all major players pushed aggressively to capture share. However, MOSL believes discounting intensity will ease going forward, supported by measured aggression by new entrants as well as incumbents.

While the competition in the QC phase is heating up, analysts expect incumbents as better placed. After Flipkart and Reliance, Amazon Now has entered the QC market.

"More competition is a feature of the land grab phase, in which adjacent players enter the market, which drives market expansion and growth. While excessive competition will weigh on profitability, we expect consumer stickiness to help incumbents retain customers," said Emkay Global.

Global brokerage Goldman Sachs said that Blinkit’s growth remains strong. Its FY27 Net Order Value (NOV) estimates are now 80%–260% higher than what it expected 1–2 years ago.

"With our expectation of store count doubling over the next 2-3 years, we believe Blinkit could see meaningful share expansion, a dynamic not fully being reflected in Zomato’s current share price in our view," said the brokerage in a note last week.

Furthermore, it forecasts EBITDA break-even for Blinkit by December 2025, which could be a key catalyst for Zomato’s stock.

Should you buy Zomato shares?

Against this backdrop, Goldman Sachs raised its 12-month target price for Zomato shares to ₹360 (from ₹340), reiterated Buy. It added that Blinkit accounts for 70% of the target price.

Meanwhile, MOSL has a target price of ₹420 on the food delivery giant as it continues to see structural tailwinds and upside to earnings estimates for the company.

However, Kunal Kamble, Sr. Technical Research Analyst at Bonanza, cautioned that Eternal stock is nearing overbought conditions and signs of exhaustion after a sharp jump signal near-term weakness.

"Eternal is in a bullish phase, with price comfortably above the EMA and supported by strong volume. The uptrend appears intact, but there are signs of potential short-term exhaustion, particularly with the RSI nearing overbought conditions and the bearish divergence in the RSI. Given the strong trend indicated by the ADX and volume confirmation, the stock may continue to rise, but should be approached cautiously for short-term trading," he said.

Investors should be mindful of potential pullbacks or sideways movement in the near term as the stock may consolidate at higher levels or experience a mild correction, Kamble cautioned.

He sees immediate resistance near the recent highs of 343. Given the current trend and the potential for short-term volatility, a trailing stop loss strategy would be prudent, he advised.

Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers, said the immediate support is placed around 320, which will act as a cushion against short-term corrections. On the higher side, resistance is seen near 365, where the stock may face some profit booking or consolidation, he added.

"Traders holding long positions can consider locking in partial profits at higher levels or alternatively trail their stop-loss to protect gains while still participating in the potential rally. A sustained move above 365 could open room for further upside, keeping the trend firmly positive," he highlighted.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.