Eternal has experienced a sustained decline in foreign institutional investor (FII) holding over seven consecutive quarters, with ownership dropping from 54% in June 2024 to 36.2% by December 2025. This steady reduction in foreign shareholding reflects strategic regulatory decisions and index-related flows affecting India's new-age internet stock.

Strategic Decision Behind FII Decline

The seven-quarter slide in FII holding directly correlates with a key strategic decision made by Eternal's board in April 2025. The company approved capping foreign ownership at 49.5% to maintain its status as an Indian-Owned and Controlled Company under FEMA regulations. This move was specifically designed to ensure regulatory flexibility for Eternal's rapidly expanding quick commerce business, Blinkit.

Under domestic FDI regulations, e-commerce platforms with majority foreign ownership exceeding 50% are restricted to marketplace model operations and cannot hold inventory. By retaining IOCC status, Eternal can transition Blinkit to an inventory-led business model, allowing the company to stock its own inventory rather than merely facilitating transactions between sellers and consumers.

Operational Advantages of Inventory-Led Model

The inventory-led model provides Eternal with enhanced control over multiple business aspects. The company gains tighter oversight of product assortment, supply chain management, and pricing strategies, while enabling improved margin management. These operational advantages could translate into better profitability over time, particularly in the quick commerce segment where speed, availability, and unit economics are critical success factors.

Brokerage Outlook Remains Positive

Despite the declining FII holding, recent brokerage commentary suggests stabilizing sentiment following a sharp stock correction. Eternal shares have declined approximately 25% from their record high of ₹368 achieved in October 2025, driven by concerns over near-term quick commerce growth slowdown and intensifying competition.

Goldman Sachs maintains a Buy rating with a revised 12-month target price of ₹375, down from ₹390 previously, implying 27.5% upside potential. The brokerage highlighted that Blinkit's implied EV to EBITDA multiple on normalized margins for FY30E stands at 14x, positioned at the lower end of India's internet peer group despite stronger growth prospects.

Goldman Sachs expects Zomato's EBITDA to grow at more than 50% year-on-year through FY30E, with Blinkit maintaining approximately 40-45% market share of India's quick commerce industry by net order value.

Market Leadership and Growth Prospects

Bernstein has also adopted a constructive stance on Eternal's quick commerce operations, expecting Blinkit to continue outperforming rivals Swiggy Instamart and Zepto in 2026. The brokerage cites Blinkit's superior operating metrics, lower cash burn, and more established contribution margins as competitive advantages.

The quick commerce industry is projected to expand by approximately 80% in 2026, driven by continued dark store additions, deeper discounting strategies, and wider category offerings. Bernstein believes strategic positioning, capital allocation capabilities, and execution excellence will determine market winners in this rapidly evolving sector.

Eternal Ltd. has issued a clarification regarding its quick commerce business Blinkit, stating that there is no change in the business model despite the removal of 10-minute delivery branding from its marketing materials.

Company's Official Response

In a stock exchange filing issued late Tuesday, Eternal addressed market concerns following reports about the branding changes. The company emphasized that no development warrants disclosure under listing rules and specifically clarified that there is no change in Blinkit's business model that could have any material impact on the company.

Labour Ministry Directive on Delivery Timelines

The Labour Ministry directed quick-commerce companies including Blinkit, Swiggy, and Zepto to stop marketing and branding 10-minute delivery timelines. Union Labour Minister Mansukh Mandaviya met with representatives of these platforms and instructed them to prioritize the safety of delivery partners, citing concerns over gig worker safety.

Industry Response and Political Support

According to news agency PTI, other aggregators are expected to follow suit in the coming days. The Labour Ministry directive came after gig workers went on strike in December to demand better payouts and improved working conditions.

Aam Aadmi Party MP Raghav Chadha welcomed the government's intervention, describing it as a timely and compassionate step. He highlighted the pressure faced by delivery partners, stating that when '10 minutes' is printed on a rider's clothing and a timer runs on the customer's screen, the pressure becomes real, constant and dangerous.

CEO's Defense of Current System

Eternal Group CEO Deepinder Goyal had previously defended the 10-minute delivery promise in a social media post, claiming it does not pressure riders or lead to unsafe driving. He explained that delivery partners are not shown the 10-minute timer on the app and argued that the system does not operate in a way that translates faster delivery promises into pressure on delivery partners to drive unsafely.

Market Performance

Shares of Eternal ended 3.20% higher at ₹294.55 on the NSE, outperforming the benchmark Nifty 50 which dropped 0.22%. The stock has gained 30.00% on a 12-month basis, reflecting strong investor confidence despite the recent regulatory developments.