Jefferies Buy Rating On Eternal: Brokerage firms amid sharp fluctuations and recent decline in global markets Jefferies online food tech company eternal (formerly ZomatoExpressing confidence on ), it has been given a ‘Buy’ rating and a target price of Rs 480 has been set, which is about 78 percent above the current level. Although the stock fell nearly 6 percent in intraday trading on Tuesday and has lost more than 10 percent in the last six sessions, Jefferies still believes there is strong growth potential in the medium term.
Why trust Jefferies?
According to the brokerage, the company can expand at the rate of about 20 percent, because the trend among consumers to order food at home is continuously getting stronger. The report also said that the food delivery business will continue to be a cash engine for the company and its margins are likely to improve to 5 to 6 percent in the long term.
Apart from this, the Quick Commerce segment, especially the company’s unit Blinkitcan prove to be a big growth driver in the future. However, increasing competition in this sector has also been seen as a risk, which may affect Blinkit’s performance in the future.
Why the increase estimate?
The biggest concern of investors is whether the current profits of the company will be sustainable in future also. On this, in the report of brokerage firm Jefferies, it has been said that the management is confident that the current profitability can be maintained in future also. The company management has clarified that the profit shown in the recent quarterly results is the result of genuine operational improvement and not a figure due to any temporary or artificial reason.
Besides, questions were also raised about the CEO of the company, founder Deepinder Goyal, becoming the vice chairman. On this, the brokerage says that the management has made it clear that this change was their personal decision, so that they can focus on new ideas and initiatives. According to the company, this change will not have any adverse impact on Eternal’s daily operations or strategic direction.
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