Eternal’s Long-Term Potential
When asked about the recent dip, Bandyopadhyay emphasized the importance of a long-term perspective. “Well, it is like this, if you are a long-term investor, you are looking at the Indian opportunity, Eternal definitely is a long-term buy. The strategy which they have adopted is definitely tilted towards growth, that is the reason why they have been actually repeatedly coming and making a statement that immediate profit and profitability is not their sole objective, they rather focus on growth and which is exactly what they are doing.”
He noted that while profitability has taken a hit, Eternal’s focus on expanding its quick commerce and food delivery platforms remains strong. “If you look at their last quarterly numbers which they came up with, again the focus was on growth very clearly. The profitability has taken a beating but in this kind of a business where there is always a propensity for the winner to take it all, it is very important that they stay ahead both in Blinkit as well as the food delivery business and pretty much that is what they are trying to ensure. There is competition from Zepto, Swiggy, and Instamart, obviously Swiggy and others. So, they have to ensure that they garner larger and larger volume and market share which is exactly what they are doing.”
For long-term investors, Bandyopadhyay recommends patience: “If I have to believe in India growth story and the platform play of e-commerce and quick commerce business or particularly quick commerce and food delivery, Eternal will be my bet from a long-term perspective, but do not buy it with a very short-term objective because you may not get the desired returns.”
Swiggy vs Eternal
On the near-term outlook for Swiggy, he shared a clear preference for Eternal. “Well, my view is if you have to buy a company in this sector, you should go for Eternal because as I was mentioning this is a business where the winner takes it all. And if you really look at the quick commerce segment which both Eternal as well as Swiggy has. Blinkit is way ahead of Instamart of Swiggy. Zepto is breathing down their neck and they are ahead of Instamart at this stage. So, the pecking order is Blinkit, Zepto, and then Instamart. So, competition-wise also Eternal has doubled down on expansion and growth. So, I would rather go for Eternal and avoid Swiggy at this stage.” IT Stocks Rally: Temporary Relief or Sustained Growth?
The discussion also turned to the broader IT sector, which has seen a modest rally recently. “Well, today’s rally has got to do with better than expected results generally from the IT biggies. Also, the H-1B visa tweaking which has been done or at least the clarification which has come from the US authorities definitely suits the Indian IT companies who plan to hire in the near future in US. They do not have to pay the incremental $100,000 for hiring resources who are already in US and that is a relief to an extent. So, these have led to the rally or kind of a mild rally, I would say, in the IT stocks at this stage.”
However, he cautioned that fundamental challenges remain. “But the fundamental concerns have not yet gone away. So, I do not think I will venture to start buying IT companies at this stage. I will wait and watch. This rally is a welcome relief for the investors in this segment. But there are lot many more challenges in the near future for the IT companies to overcome before we can say that they have moved from kind of a single-digit growth to a double-digit growth, as things stand now the forecast is for kind of a low single-digit growth for the IT biggies.”
Bottom Line
For investors looking at Eternal, the expert advice is clear: focus on long-term growth, be wary of short-term dips, and prioritize market leaders in the fast-evolving quick commerce sector. Meanwhile, IT stocks may enjoy temporary rallies, but the fundamentals suggest that caution remains key.
