From its October 2025 peak of Rs 368.45, it has slipped to the Rs 250-255 range by February 2026, underperforming the broader indices. So what has changed?
Competition is back in focus
The biggest overhang is intensifying competition in both food delivery and quick commerce. The sector has turned aggressive again, with rivals investing heavily to defend or expand market share.Vinod Nair, Head of Research at Geojit Investments, said the stock has come under pressure due to intensifying competition in food delivery and quick commerce, where aggressive investments to defend market share continue to weigh on industry margins. High valuations and weak broader market sentiment have amplified the correction, he added.
Quick commerce, in particular, remains capital-intensive. Although Blinkit reported Adjusted EBITDA breakeven in Q3FY26 with a Rs 4 crore profit compared to a Rs 156 crore loss in the previous quarter, investors are not fully convinced that profitability can scale without fresh margin pressure.
The company added 211 net new stores in the quarter, taking the total to 2,027. Management has guided towards 3,500-4,000 stores by March 2027. That kind of expansion requires sustained capital deployment.
Axis Securities noted that while Blinkit’s breakeven milestone is a significant development, short-term financial performance may remain under pressure due to competitive intensity.
Stretched valuations
Another factor is valuation reset. Eternal was trading at premium multiples after a strong rally driven by optimism around operating leverage and scale benefits. High-multiple stocks are vulnerable to corrections when earnings visibility weakens even slightly.
Vishnu Kant Upadhyay, AVP – Research Advisory at Master Capital Services, said the 20% decline appears largely sentiment-driven rather than due to structural weakness. However, he pointed out that elevated valuations made the stock vulnerable to profit-taking after the multi-year rally.
When a stock is priced for near-perfect execution, any uncertainty can trigger sharp corrections. The recent dip reflects that reassessment.
Leadership transition added uncertainty
Leadership change has also contributed to short-term nervousness. Founder Deepinder Goyal stepped down as CEO in early 2026 and moved into a non-executive role. While the transition was planned, investors often react cautiously to founder role changes, especially in companies still navigating expansion phases.
Upadhyay said the move sparked short-term execution concerns, adding to the negative sentiment around the stock.
Profitability still evolving
Operationally, the company’s core food delivery business is showing steady recovery. Food delivery reported 16.6% YoY growth in net order value in Q3FY26, with Adjusted EBITDA margins reaching an all-time high of 5.4%. Monthly transacting customers rose to 24.9 million from 20.5 million a year ago.
Management expects growth to gradually inch towards 20% over time. The Going Out segment also reported 20% YoY growth and is projected to become a $3 billion net order value business by FY30.
Hyperpure, the B2B supply arm, turned Adjusted EBITDA positive with a Rs 1 crore profit and is projected to reach $1 billion in topline over the next three years. Yet the ‘Others’ segment, including quick food delivery service Bistro, continues to report quarterly losses of about Rs 50 crore. While this is a small part of the overall business, it reinforces the perception that new initiatives are still consuming capital.
Abhinav Tiwari, Research Analyst at Bonanza, said investors are now reassessing the company’s ability to generate durable free cash flows. Growth remains visible, but markets want predictable earnings rather than just scale.
He said the stock’s underperformance reflects a broader shift from growth-at-any-cost narratives to disciplined profitability.
Strong balance sheet, but cautious outlook
One factor that supports the long-term case is the company’s strong cash position. Eternal had a cash balance of Rs 178 billion as of December 2025. Management has reiterated a long-term ROCE target of over 40% for investments in quick commerce.
Vinod Nair said operationally the company has shown steady sequential improvement in Q3, offering comfort to long-term investors. Blinkit’s shift to an inventory-led model and scale efficiencies could drive margin expansion over time, he added, while cautioning that near-term volatility is likely to persist.
Arpit Jain, Joint MD at Arihant Capital Markets, said the stock’s earlier rally was supported by recovery in Blinkit. However, recent fundraising by competitors has revived concerns that losses in the segment could persist longer than expected.
He believes the dip can be viewed as an opportunity for long-term investors but suggests accumulation in tranches. According to him, the Rs 240-250 zone is a key level, and deeper corrections closer to Rs 200 would offer stronger entry points.
What lies ahead
Eternal is no longer a turnaround story. It is a scaled platform company. The market now expects steady earnings growth, margin stability and disciplined capital allocation. The core businesses are improving, and quick commerce has hit an important profitability milestone. But competitive intensity, valuation reset and leadership change have created a phase of consolidation.
Whether it regains its old form will depend on how convincingly it converts scale into sustainable margins over the next few quarters, analysts said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
