Eternal shares zoom 20% this week as Street rejoices Q1 results. What should investors do now?

Time of India

24-07-2025

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What should investors do now?
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Shares of Eternal , formerly Zomato , have surged 19.7% so far this week, hitting a high of Rs 307.95 on the BSE on Thursday. The rally follows the company's Q1FY26 earnings report, which, despite a steep decline in profitability, impressed the Street with strong topline performance and robust growth across its core verticals.The stock touched a fresh record high of Rs 311.60 earlier this week after it reported a 70% YoY surge in revenue from operations to Rs 7,167 crore for Q1FY26. This growth was led by solid performance in the quick commerce and food delivery segments.However, net profit dropped sharply by 90% YoY to Rs 25 crore, down from Rs 253 crore in the same quarter last year, largely due to continued investments in quick commerce and the going-out vertical.Akshant Goyal, CFO of Zomato , attributed the drop in profitability to 'continued investments in quick commerce and the going-out vertical.'The company's consolidated adjusted EBITDA declined 42% YoY to Rs 172 crore. Still, food delivery EBITDA margin improved to 5.0% from 3.9% a year ago. Additionally, net order value (NOV) of its B2C businesses grew 55% YoY and 16% QoQ to Rs 20,183 crore, with quick commerce surpassing food delivery NOV for the first time in a full quarter.After the sharp run-up, technical analysts have differing views on the next course of action.According to Kunal V Parar, VP of Technical Research and Algo at Choice Broking, 'The stock has delivered an impressive return in recent sessions and continues to exhibit strong upward momentum, suggesting potential for further gains from current levels.' He observed that although the stock recently touched a new all-time high, it 'struggled to sustain above its previous resistance at Rs 305.'A decisive close above this level could, in his view, trigger the next leg of the rallyFrom a technical standpoint, Parar noted that the stock is currently trading above both its 50-day and 100-day moving averages, with a positive crossover that signals sustained bullish sentiment. Additionally, the daily Relative Strength Index (RSI) has moved above 70 for the first time in a while, indicating renewed market participation.He expects the stock to move towards the Rs 324–Rs 360 range in the near term, but advised investors to maintain a strict stop loss at Rs 275 to manage risk.On the other hand, Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, advised caution at current levels.In his words, 'At the current juncture, investors are advised to book profits in the Rs 300–Rs 305 range, as the stock approaches its previous high from December 2024.'Patel added that investors should adopt a 'wait-and-watch approach' until a decisive weekly close above Rs 305 is observed before considering any fresh entry.On Thursday, the shares of Eternal were trading 2% higher at Rs 308 on the BSE around 10 am.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)