Quick Commerce Drives

ETERNAL

's Valuation and Strategic Shift

(formerly Zomato) is positioned in the top 25 and top 15 Nifty 50 companies by total market capitalization (mcap) and free float mcap, respectively. → The company's stock price saw a surge of 30% in the last two months, primarily fueled by the optimistic management forecast for its quick commerce arm, Blinkit, during the Q1FY26 earnings call. → Blinkit has transitioned from a commission-based model to an inventory-owned model, meaning its revenue and sales will now be directly reflected on the books. → The total market cap of Eternal (₹3.1 trillion) is slightly higher than D'Mart (₹2.9 trillion). After deducting the brokerage-estimated valuation of the food delivery business, Zomato (₹1.25 trillion), Blinkit's standalone valuation by the market is approximately ₹1.85 trillion. → Based on the mcap/sales metric for FY27, Blinkit is valued at approximately 3.8 times, comparable to D'Mart, despite a potentially massive annual revenue of ₹50,000 crore, even if a conservative store count of 2,000 is considered → Blinkit's mature dark stores are already achieving a 2.5% EBITDA margin, making the long-term target of a 5% margin (compared to 7-8% for D'Mart and Reliance Retail) ***** the lower Ebitda margin, Blinkit's low capital intensity gives it a significant edge, with a potential Return on Capital Employed (ROCE) of around 40%, which is more than double that of D'Mart. → The shift to an inventory-owned model by Blinkit gives it a first-mover advantage over its competitor, Swiggy's Instamart, which currently uses a commission model but is restructuring to likely reduce foreign shareholding to below 50% to adopt a similar inventory-led approach. → However, the elevated mcap and future appreciation of Eternal's stock are contingent on continued positive performance in quick commerce metrics, especially given the threat from well-funded rivals like Amazon and Flipkart, who could adopt a similar model.