Eternal Shares Climb 16 Per Cent In A Week - What's Behind The Rally

Eternal Share Price: Shares of Eternal, the parent of food delivery platform Zomato and quick commerce app Blinkit, surged over 5.5 per cent in intraday trade on June 5, 2025, to hit a high of Rs 260.22 per share on the NSE. This is the second consecutive day of rally in the stock, which has pushed it within touching distance of its current calendar year high of Rs 262, hit on January 16.

The sharp rebound comes after a period of steep correction. After hitting an all-time high of Rs 304.70 on December 9, 2024, Eternal shares fell into a sharp correction, falling more than 36 per cent to hit a low of Rs 194.80 on April 7, 2025.

Since then, the stock has staged a strong recovery, gaining nearly 33 per cent from its April low, with more than 16 per cent of those gains coming in just the past six sessions.

Why Is Eternal Share Price Rising

The recent rally in Zomato share price is driven in large part by a bullish stance from brokerage firm Morgan Stanley, which reaffirmed its 'Overweight' rating and reiterated the stock as a top pick in its sector.

The brokerage firm, in a recent note, said that it prefers Eternal over competitors like Swiggy. This is because of Eternal's strong market leadership in both quick commerce and food delivery; its efficient cost structure, which supports healthier unit economics compared to peers; and a stronger balance sheet, which reduces the risk of the company needing to raise more equity. Further, the brokerage believes that the stock offers a good risk-reward balance at the current price.

Fast Growing Quick Commerce Space

Morgan Stanley also sees the quick commerce business model growing fast and expanding beyond just urgent, last-minute grocery orders. The brokerage firm added that the quick commerce space started with delivering high-frequency items like groceries in under 15 minutes, but it is now also meeting regular shopping needs for products like toys, beauty items, and healthcare essentials, which are getting delivered within 30 minutes.

The brokerage believes this shift is opening up a much larger market for quick commerce. Even though there's a lot of competition, the brokerage sees the space as still being in the early stages. That means there's room for several players, including Eternal and Swiggy, to grow materially over the next 3 to 5 years.

Key Risks In Quick Commerce, Food Delivery Space

Apart from the constant market share tussle between the rivals Eternal and Swiggy, Morgan Stanley also outlined a few key risks that could affect its positive view on the quick commerce space.

One of the major concerns is the level of investment needed to stay competitive in the quick commerce space. Given the intense competition, similar to what has been seen in markets like China, there's a chance that companies may have to spend more than expected to hold their ground. If that happens, Eternal and Swiggy could face higher cash burn, which might lead to the need for further equity dilution, the brokerage firm noted.

The brokerage firm added, "External factors, such as regulatory risks pertaining to gig worker regulations or foreign direct investment (FDI) in retailing-related regulations, could create risks for business models in food delivery and quick commerce."