Zomato parent Eternal shares jump over 5% as Morgan Stanley reaffirms bullish stance; analysts see long-term upside intact

Shares of Eternal Ltd (formerly Zomato) rallied over 5 per cent intraday on Thursday, June 5, to hit a high of Rs 258.3 on the NSE, extending their two-day gains to more than 8 per cent. The buying interest was driven by strong trading volumes and bullish commentary from global brokerage Morgan Stanley.

Morgan Stanley retains ‘Overweight’

The key catalyst behind the surge was Morgan Stanley’s reiteration of its ‘Overweight’ call on Eternal. The brokerage retained its target price of Rs 320, implying a nearly 24 per cent upside from current levels. It called Eternal one of its top stock picks in the Indian internet space, citing its leadership in both food delivery and quick commerce, along with a leaner cost structure and strong balance sheet. Importantly, the brokerage noted that downside risk was limited to the Rs 200- 220 range, offering a favourable risk-reward equation.

India’s quick commerce market gets a $15 billion upgrade

Morgan Stanley also raised its long-term forecast for India’s quick commerce total addressable market (TAM) to $57 billion by 2030, up from its earlier estimate of $42 billion. The upward revision was based on faster user growth, improved delivery logistics beyond top metros, and stronger-than-expected gross order value (GOV) trends.

While the brokerage kept its food delivery growth assumptions unchanged for FY26–28, it raised margin forecasts slightly due to better operating leverage. However, it warned that intense competition may delay significant EBITDA margin expansion, resulting in minor downward tweaks to FY27–28 earnings projections.

Q4 earnings result 

Eternal reported a steep 77.7 per cent YoY drop in Q4FY25 net profit to Rs 39 crore, down from Rs 175 crore a year ago. However, revenue from operations surged by 63.8 per cent to Rs 5,833 crore, showcasing continued top-line strength. The company’s EBITDA fell 16.3 per cent to Rs 72 crore, with EBITDA margin slipping to 1.23 per cent from 2.41 per cent.

Despite the profit dip, analysts believe the company’s strong revenue momentum and market position in high-growth sectors like quick commerce will support long-term gains.

Long-term view

With a current market capitalisation of over Rs 2.49 lakh crore, Eternal has positioned itself as a key internet economy player. The ongoing shift in consumer behaviour towards digital consumption, coupled with its execution capabilities, is expected to drive long-term shareholder value.

Even though Q4 margins disappointed, brokerages see Eternal benefitting from scale, tech-driven efficiencies, and category leadership. As profitability improves, the stock could potentially command premium valuations, especially if the quick commerce segment matures faster than expected.

While short-term earnings volatility persists, the long-term investment case for Eternal remains compelling. With Morgan Stanley’s Rs 320 target acting as a near-term benchmark and structural tailwinds in its favour, Eternal’s stock could be one to watch for investors betting on India’s digital consumption boom.