Eternal shares (earlier Zomato) on April 22, 2025, surged almost 4% after the bullish Goldman Sachs note forecasted a high incremental share value forecast for Zomato due to strategic changes and operational improvements at Blinkit. The shares hit an intraday BSE high of Rs 243.45 as investors reacted to the external developments and analyses.”
Below are the highlights explaining the reasons for the rally, how the proposed foreign ownership cap affects it, and why Blinkit margin boost is perhaps the heart of this optimism for the quick commerce sector.
Goldman Sachs’ Bullish View on Eternal Share
Goldman Sachs reiterated its unyielding bullish stand on Eternal shares, maintaining a ‘Buy’ rating and arriving at a target price of Rs 310. The brokerage views the proposal by Eternal shares to curb foreign ownership cap at 49.5% as a strategic move very much favorable to Blinkit.
While the shareholding limit may lead to the outgo of cash by major indices like MSCI and FTSE, in the long run, the positive impact is seen to outweigh any short-term turbulence.
Foreign Ownership Cap: A Strategic Move
The proposed foreign ownership cap at a maximum of 49.5% will ensure that Blinkit remains majority Indian-owned; this is pivotal since Indian FDI regulations do not permit foreign-controlled companies to run inventory-led e-commerce models or price control on products.
Ensuring domestic ownership thereby allows Eternal shares to convert Blinkit from a purely online model to a 1P (inventory led) model, thereby facilitating a Blinkit margin boost and providing a regulatory edge in India’s rapidly competitive quick commerce setting.
Blinkit Margin Boost: The Key Driver
Goldman Sachs has estimated that transferring Blinkit into the 1P model could save the company 100 basis points in seller commissions. It is estimated that this will increase the EBITDA margin of Blinkit from 1.4% to 2.5% until FY27, assuming that a full SKU transfer happens over the next year.
Hence, Blinkit margin boost would potentially account for an additional Rs 35 in Zomato’s estimate (15%-20% higher EBITDA for FY30 for Blinkit) over the current estimated EBITDA.
Quick Commerce Sector: Competitive Advantages
This establishes Blinkit as a clear contender for a significant share in the growing quick commerce market in India. Also, since rivals Swiggy Instamart and Zepto are considered foreign-owned, Blinkit can use the foreign ownership cap as a regulatory advantage.
This further solidifies Blinkit’s ability to control inventory, fix competitive prices, thus passing cost savings onto consumers, thereby driving further demand and growth into the quick commerce market.
Financial Impact and Returns
Eternal shares presently carries $2.3 billion cash on its books, as of the end of the December quarter, which implies adequate liquidity to support inventory buildup at Blinkit. Goldman Sachs expects if under 1P Blinkit transitions its KSUs to 1P entirely, that would rise Zomato’s FY26 inventory by $200 million probably net of working capital impact offset by higher payables and labels this change as “highly returns accretive”, estimating an incremental ROCE of over 50% for Blinkit.
EPS and Shareholder Value
It is Goldman Sachs scenario analysis, from the dividend standpoint, that suggests that this transition could add Rs 0.6 to Zomato’s earnings per share by FY27 and the amount of Rs 1.2 per share by FY30, which would add to their EPS options by 17% and 9%, respectively, on current estimates.
Every change of 50 bps in Blinkit’s EBITDA margin would change FY30 EPS by Rs 0.6 per share, meaning Blinkit margin boost is highly sensitive and has upwards potential.
Market Reaction and Analyst Sentiment
The market did gush forth enthusiastic responses, leading to a rise of 3.97% for Eternal shares on the BSE. While the foreign ownership cap may lead to some passive outflows from global indices, analysts think the strategic advantages that Blinkit would provide would outweigh such risks for Zomato as a whole.
Goldman Sachs’ confidence is echoed by other brokerages who see significant growth potential in the quick commerce segment.
Regulatory and Competitive Context
Almost all of Blinkit’s competitors are treated as foreign owners, which remains a limitation to operating inventory-led models. Therefore, by restricting foreign ownership cap, Blinkit has ensured a unique space to optimize supply chains, increase margins and take advantage of the booming quick commerce sector.
The position will now be important regulatorily to differentiate Eternal shares and Blinkit into the future.
A Transformative Phase for Eternal and Blinkit
The rise in Eternal shares is fueled by Goldman Sachs‘ positive view on the strategic shift the foreign ownership cap has brought and the ensuing Blinkit margin boost. This reinforces Blinkit for exceeding growth and profitability within the domain of quick commerce, with a potential upside for Zomato of Rs 35 per share.
Investors have more reasons to believe that the company will continue to derive value as it undertakes processes in transforming regulatory dynamics while leveraging its domestic ownership.
