Eternal has achieved a significant milestone in its journey toward greater international market accessibility, with foreign ownership crossing the critical 25% threshold. This development marks an important step for the company's global investment profile and opens new avenues for institutional participation.

MSCI Eligibility Achievement

The company's foreign ownership structure has now surpassed the 25% requirement, making it eligible for full MSCI weight consideration. This threshold represents a key criterion for index inclusion and reflects growing international investor confidence in the company's prospects.

February Review Implications

The upcoming February MSCI review presents a crucial opportunity for the company. With the foreign ownership requirement now met, the company stands positioned for potential inclusion or upgraded weighting in MSCI indices. This review process could significantly impact the company's accessibility to global institutional investors.

Investment Flow Potential

The achievement of MSCI eligibility could attract substantial passive investments to the company. Market estimates suggest that the full MSCI weight inclusion may result in approximately $390.00 million in passive investment inflows. This potential capital influx represents a significant boost to the company's market liquidity and institutional investor base.

Market Impact

The crossing of the 25% foreign ownership threshold demonstrates growing international recognition and confidence in the company's business model and growth prospects. This milestone enhances the company's profile among global institutional investors and fund managers who track MSCI indices for their investment decisions.

Eternal Ltd shares were trading at ₹280.65, down 1.32% from the previous close of ₹284.40, with a market capitalisation of ₹2,70,837.09 crore. Despite the stock's premium valuation, Goldman Sachs has initiated a positive outlook on the company's growth prospects in India's expanding e-commerce sector.

Goldman Sachs Initiates Buy Rating

Goldman Sachs has assigned a 'Buy' rating to Eternal with a target price of ₹375.00, implying a potential upside of approximately 32% from recent closing levels. The global brokerage believes concerns around quick commerce appear overdone, with penetration still near 5% and significant headroom for growth.

The brokerage highlighted Eternal's superior execution capabilities that support faster expansion compared to peers, while margin improvement levers remain intact. A key catalyst identified is the expected EBITDA breakeven for Blinkit by early FY27, which could act as a significant re-rating trigger for the stock.

Strong Financial Performance

Eternal reported robust operating momentum in the September 2025 quarter, demonstrating significant growth across all business segments:

The company's profitability metrics strengthened significantly during the quarter, with adjusted EBITDA margin reaching a record 5.30% of NOV. EBITDA crossed ₹500.00 crore, representing an improvement from ₹451.00 crore in Q1 FY26, supported by strong operating leverage and improving scale.

Market Leadership in Quick Commerce

Eternal's quick commerce arm, Blinkit, maintains a commanding position in India's 10-minute delivery segment with a 45% market share. The competitive landscape shows:

Aggressive Expansion Strategy

The company is accelerating its expansion plans, targeting 2,100 stores by December 2025, above its earlier guidance of 2,000 stores. This upward revision signals continued confidence in demand and the company's ability to scale operations effectively across key cities.

Valuation Concerns

Despite the positive operational metrics, Eternal's valuation appears stretched with a PE ratio of 1,460x, significantly higher than the typical market range of 15-25x. This extreme valuation suggests investors are paying approximately 65 times more than normal market multiples, reflecting overheated expectations and limited margin of safety.

The Indian e-retail food delivery sector, valued at approximately USD 45.00 billion in 2024, is expected to grow at a CAGR of over 20%, potentially reaching close to USD 140.00 billion by 2030, driven by rapid urbanisation and increasing smartphone penetration.