Eternal shares reverse sharply after early surge as management transition and competition fears spook investors
Eternal Ltd shares saw dramatic intraday volatility on January 22, erasing all morning gains and sliding more than 9 percent from the day’s high, as investors digested the company’s Q3 results, a major leadership transition, and rising brokerage caution over intensifying competition in food delivery and quick commerce.
The stock touched an intraday high of ₹305, its strongest level since December 1, before slipping sharply to ₹276.05 in afternoon trade. The swing reflected growing uncertainty over whether strong headline numbers can translate into durable profitability as the sector heats up.
Eternal’s Q3 results deliver growth, but margins and strategy raise new questions
Eternal, which owns Zomato and Blinkit, reported a consolidated net profit of ₹102 crore for Q3 FY26, marking a 73 percent year-on-year jump from ₹59 crore in the same quarter last year.
Revenue growth was even sharper. The company’s revenue from operations surged 202 percent to ₹16,315 crore, compared with ₹5,405 crore in Q3 FY25. Total expenses also rose steeply by 198 percent to ₹16,493 crore, highlighting the cost intensity of scaling both food delivery and quick commerce.
Alongside the earnings announcement, Eternal confirmed a key leadership change:
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Founder and Group CEO Deepinder Goyal has stepped down from the CEO role
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Blinkit CEO Albinder Dhindsa will take over leadership
This transition became a central focus for investors and analysts alike.
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Management transition adds another layer of uncertainty for traders
Leadership changes at high-growth internet companies often trigger mixed reactions. While some investors view the move as succession planning, others worry about strategic shifts at a sensitive phase of competition.
Elara Capital struck a positive tone, stating:
“Deepinder Goyal’s move to the role of Vice Chairman augurs well. He retains strategic oversight and execution is uninterrupted.”
JM Financial echoed this confidence, noting that Dhindsa’s elevation reflects execution strength:
“The transition elevates a leader with a demonstrated history of scaling a business that now represents the cornerstone of Eternal’s future growth.”
Still, the market reaction suggests traders remain cautious about how the new leadership will balance growth, pricing, and profitability in an increasingly crowded space.
Motilal Oswal warns of a ‘dogfight’ as competition intensifies
The sharp intraday selloff was largely triggered by brokerage commentary warning that Eternal could be drawn into aggressive competitive behavior.
Motilal Oswal acknowledged that revenue growth exceeded expectations and that Blinkit’s adjusted EBITDA breakeven was a positive milestone. However, the brokerage cautioned that this respite may not last.
“The EBITDA respite in Blinkit will likely be short-lived as competitive intensity in quick commerce re-accelerates. Potential elevated discounting and investments are anticipated to constrain profitability in the short term.”
Motilal now sees the risk of Eternal entering a “dogfight”, driven by:
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Lower minimum order values
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Higher discounts
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Rising customer acquisition costs
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Aggressive pricing from rivals
As a result, it cut its target price to ₹360 from ₹420, while maintaining a Buy rating.
Emkay Global: Market share may come at the cost of margins
Emkay Global also highlighted the trade-off between growth and profitability. While praising Eternal’s operational execution, the brokerage suggested the company may need to sacrifice margins to defend market leadership.
“Management said it will respond to competition and is willing to sacrifice margins. During a land-grab phase, companies should prioritize market share over margins to build scale.”
Emkay believes competitive intensity will increase further in quick commerce and expects slower margin expansion in FY27 and FY28. It revised its target price to ₹370, while maintaining a Buy recommendation.
Other brokerages remain constructive despite near-term pressure
Not all commentary was cautious. Several brokerages continue to see Eternal as a long-term compounder.
JM Financial highlighted Blinkit’s breakeven milestone as structurally important:
“Blinkit achieved Adj. EBITDA breakeven, surpassing our expectations by at least two quarters. We reiterate Eternal as our preferred pick.”
It maintained a target price of ₹400.
Axis Securities also reiterated its Buy view but acknowledged near-term headwinds:
“Rising competitive intensity and rapid store expansion are likely to keep profitability under pressure in the near term.”
It values the stock at ₹360 per share based on SOTP valuation.
Here’s what happened today and why traders reacted
The market reaction was less about the quarterly numbers and more about future expectations.
Traders responded to three developments:
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Concerns that competition in quick commerce is heating up again
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Fear that higher discounts could delay margin expansion
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Uncertainty around leadership transition during a critical growth phase
The result was a classic “sell-on-strength” move, where early optimism gave way to profit booking and caution as broker reports circulated through the session.
What impact does this move have on investor portfolios?
For short-term traders, the sharp reversal highlights rising volatility in internet and consumer-tech stocks. Momentum-driven positions can face sudden drawdowns when sentiment shifts.
For long-term investors, however, the picture is more nuanced. Most brokerages still maintain Buy ratings, suggesting that while margins may be volatile, Eternal’s structural position in food delivery and quick commerce remains strong.
Key implications for investors:
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Expect continued volatility in the stock
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Near-term upside may be capped by competition fears
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Long-term thesis still hinges on execution in Blinkit and pricing discipline
What investors should watch next in Eternal
Going forward, markets will closely track:
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Management commentary on discounting strategy
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Blinkit’s ability to sustain breakeven amid expansion
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Market share trends versus competitors
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Any change in customer acquisition costs
If Eternal manages to defend growth without aggressive margin erosion, sentiment could improve quickly. But if price wars escalate, volatility is likely to remain elevated.
