Eternal (ETERNAL)
Fast GrowerFairStock Score: 50/100 — MIXED
Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹318.5 |
| Market Cap | ₹2,93,191.78 Cr |
| P/E Ratio | 707.78 |
| ROCE | 2.66% |
| ROE | 0.75% |
| Dividend Yield | 0% |
| Profit Growth | -2.82% |
| Debt/Equity | 0.15 |
| Sales Growth | 40.21% |
| Free Cash Flow | ₹-7,685 Cr |
| Promoter Holding | 0% |
| 52-Week Range | ₹212.6 — ₹368.45 |
| Sector | Retailing |
| Book Value | ₹33.83 |
Strengths
- Exceptional revenue growth: sales up 138.73% and 5-year CAGR 58.97%.
- Low leverage: Debt/Equity 0.11 and Current Ratio 3.08 provide short-term liquidity.
- Strong solvency signals: Piotroski F-Score 8/9 and Altman Z-Score 21.80 suggest low bankruptcy risk.
- Latest quarter profitable in absolute terms: ₹102 Cr net profit on ₹16,315 Cr sales.
Concerns
- Extreme valuation: P/E 1000, EV/EBITDA 721.40, PEG 43.27 and price far above Graham Number ₹13.40.
- Negative free cash flow of ₹-7,685 Cr and profit growth -65.16% despite sales growth of 138.73%.
- Weak returns: ROE 0.75%, ROCE 2.66%, no dividend and zero promoter holding.
AI Analysis
As a value investor, I first look for margin of safety. At ₹259.90 with a market cap of ₹2.38 lakh crore, Eternal leaves none. The Graham Number is ₹13.40, meaning the price is over 17 times what a conservative intrinsic estimate would allow, with a negative margin of safety of -1737%. Sales growth of 138.73% and a five-year revenue CAGR of 58.97% tell me this is a fast-growing consumer franchise. But growth alone is not investment. Net profit fell 65.16%, while the latest quarter's ₹102 Cr profit on ₹16,315 Cr of sales is under 1% net margin. ROE is 0.75% and ROCE 2.66%—hardly the compounding machine I seek. Free cash flow is deeply negative at ₹-7,685 Cr, so the business is consuming capital even as the P/E stands at 1000 and EV/EBITDA at 721. The balance sheet looks safe today—debt/equity 0.11, current ratio 3.08, Altman Z 21.80 and a strong Piotroski score of 8/9—but I am not buying a bond. I am buying earning power, and the earning power is missing. Zero promoter holding and no dividend further fail my skin-in-the-game and shareholder-return tests. In e-commerce, scale can eventually lead to economies; however, the current price capitalises decades of perfection. Graham would call this speculation, not investment. The FairStock score of 50/100 says mixed, but I see no bargain. I would only revisit if the business demonstrates durable margins, positive free cash flow, and a price that offers substantial margin of safety. Until then, this is a wonderful sales story—but not a value investment.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer