Most expensive Nifty stock ever? Eternal at 455 PE dares you to doubt the hype

If something is good enough, it would probably be expensive. But at 455 times earnings, Eternal isn’t just expensive but in a valuation galaxy of its own. The Nifty 50’s newest entrant is also its most richly valued stock, wearing a PE multiple that makes seasoned value investors squirm and growth investors think twice.

Don’t blame only Eternal. Two other Nifty constituents, Trent (132x PE) and Jio Financial (113x PE), are also sitting pretty above the 100x valuation mark, signaling a shift in investor appetite towards long-term growth over current profits.

On the opposite end of the spectrum? Coal India, the public sector behemoth, trades at a humble PE of 6.8x, giving Nifty watchers a vivid picture of the valuation extremes in India’s top 50 listed companies.

A trailing 12-month (TTM) PE of 455 means investors are paying today for profits the company may earn over the next four and a half centuries, if earnings stood still. But theory rarely captures the speed at which some Indian digital-first companies are expanding. Eternal, formerly known as Zomato, is thriving in two of India’s hottest consumer tech battlegrounds: food delivery and quick commerce.

Despite investor worries and growing competitive heat, the stock is anything but untouchable.
Mutual funds have been lining up for a bite of Eternal. In May alone, they pumped in ₹5,300 crore, making it the third-most bought stock that month, according to estimates by Prime Database.
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Earlier this month, Morgan Stanley reiterated Eternal as its top India internet pick, citing its market leadership in both food delivery and quick commerce, a superior cost structure, and a balance sheet stronger than its peers. The firm has a target price of ₹320 on the stock.

While Eternal shares are down 10% year-to-date, the Street isn’t writing it off. Concerns loom large. Rapido’s entry into food delivery, intensifying competition from Zepto, BigBasket, Swiggy Instamart, Amazon Now, and Flipkart Minutes in the quick-commerce race but believers say the company’s edge lies in execution.

BofA Securities’ Sachin Salgaonkar returned from a recent internet tour upbeat on Eternal’s quick commerce arm Blinkit:

“Traction in Tier 2 cities surprised industry experts… some stores hit 1,000 orders per day within 6–9 weeks. Amongst the top platforms, only Zomato continues to add more dark stores while others like Swiggy/Zepto/BigBasket have started to slow down store adds.”

That expansion drive, Salgaonkar believes, gives Blinkit a competitive edge, especially as rivals slow store additions. Interestingly, the real kicker isn’t convenience or discounts but better product selection, especially in smaller cities.

ICICI Securities, too, maintains a Buy rating, valuing Eternal at ₹310 via a three-stage DCF model. The brokerage sees signs of softening pricing wars, noting that Instamart and Zepto have reduced the pricing gap with Blinkit. The end of the discount era may be in sight—a potential profitability trigger.

For Jefferies, Eternal is a long-term bet on the digitization of food services. “With only ~20 million monthly transacting users currently, there’s a long runway for growth. Blinkit is already the market leader in quick commerce and is poised for sharp margin improvement.”

Palak Shah, VP, PL Capital, adds perspective from the institutional front: “Markets focus on the total addressable market and execution capability. Eternal has proven itself in food delivery. The belief is now that they can replicate that in quick commerce. Once the capex phase is over, operational efficiency will drive the narrative.”

Also Read | Rapido crashes food delivery party. Should Swiggy and Eternal investors be worried?

Yet, competition is getting bolder. Rapido’s attempt to disrupt the food delivery space by lowering commission rates is leading to speculation that the Gross Order Value (GOV) may start shifting from Zomato.

Manish Sonthalia, CIO at Emkay Investment Managers, argues that while the entry barriers are low, fixing unit economics is extremely difficult. “Just entering and playing the pricing game doesn’t guarantee success. Execution capability is crucial. Yes, competition is increasing, but the “right to win” currently lies with only one dominant player. Others are still evolving. New entrants will have to work really hard.”

Eternal may just be the poster child for investors who bet on the future, even when the present valuation feels like a cliffhanger. For now, the 455x question remains: Is the market’s faith eternal or just euphoric?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)