India’s Consumer Internet Sector Analyzed
Key Points
- Elara Capital sees Eternal as a key player in India’s growth.
- Swiggy gets an “accumulate” rating with a ₹450 price target.
- E-commerce penetration is low, opening significant growth opportunities.
- Eternal’s strategy mirrors successful global e-commerce leaders.
- Growth in food delivery and quick commerce segments is projected.
- Elara Capital values Eternal at ₹400 per share based on analysis.
India’s E-Commerce Landscape
India’s consumer internet sector is currently in a crucial stage. Only about 7% of the population uses e-commerce, which is similar to the situation in the US and China in the early 2010s. This means there’s a lot of room for growth.
Elara Capital believes companies like Eternal are well-positioned to succeed. They are using strategies that have worked for companies like Amazon and Meituan. These companies are now focused on making money, while Eternal is still growing quickly.
The food delivery and quick commerce segments, particularly, are expected to grow significantly. Elara Capital projects that the number of people using these services will increase, and the amount of orders will also go up.
Eternal has been operating for 18-23 years and is entering a phase where successful global e-commerce companies transition from simply growing to becoming profitable. Historically, companies like Amazon (excluding its cloud computing division, AWS) saw around 22.2% revenue growth during this time and traded at a multiple of 2.3 times their sales.
Based on their research, Elara Capital estimates that Eternal will grow by 46% per year for the next few years. This would mean they trade at a multiple of 4.9 times their sales. Putting all this information together, they arrive at a price of ₹400 per share for Eternal.
Eternal is considered the “valuation anchor” for the entire consumer internet sector in India, meaning it’s the key company they use to measure the worth of other companies in this area.
“The potential for growth in India’s consumer internet market is significant, and Eternal is a key player in that growth.”
