Eternal shares jump on MSCI weight boost, $674mn inflows
What's the story
Eternal Ltd, a leading player in the quick commerce and food delivery sector, is set to witness a massive inflow of capital. The development comes as a result of an increase in its weightage in the MSCI Standard Index. According to Nuvama Alternative & Quantitative Research, this change could bring potential inflows worth $674 million (205 million shares) into Eternal's stock. Following the announcement, Eternal shares rose 1.3% today to trade at ₹318.10.
Upcoming changes
MSCI rebalancing to benefit multiple companies
The MSCI rebalancing exercise, which will see the weightage increase for Eternal and other companies, is scheduled to take place on August 31.
Along with Eternal, Adani Enterprises, Adani Ports, Swiggy, Adani Power, JSW Energy, and GMR Airports are also expected to benefit from this change in their respective weightages.
Market performance
Eternal's shares gain over ₹100 from recent lows
Eternal's shares have gained over ₹100 from their recent 52-week lows of nearly ₹212.
The company had reported its June quarter results last month, with a net Order Value (NOV) growth of 20% in the Food Delivery segment.
This was at the higher end of the estimated growth range of 18-20%.
Business expansion
Strong performance in June quarter leads to positive brokerage outlook
Eternal's Quick Commerce business, known as Blinkit, witnessed an impressive NOV growth of 86% in the same period. This was much higher than the expected growth range of 20-25%.
The strong performance across both segments has led JPMorgan to maintain its "overweight" rating, CLSA to retain its "high-conviction outperform" rating, and Jefferies and HSBC to maintain their "buy" rating on Eternal's stock with varying price targets.
Analyst endorsements
Price targets and recommendations from various brokerages
Brokerage firm JPMorgan has kept its "overweight" rating on Eternal's stock with a price target of ₹390.
CLSA also retained its "high-conviction outperform" rating with a higher price target of ₹506.
Jefferies and HSBC have also maintained their "buy" ratings on the stock with price targets of ₹415 and ₹340, respectively.
Out of 33 analysts tracking Eternal, 29 have given it a "buy" recommendation.