Key insights
- Morgan Stanley maintains Eternal as its top pick in Indian internet stocks, citing strong execution and balance sheet despite an 8% correction in India's internet market cap index since late March 2026. This mirrors a similar pattern in the US internet market. While funding remains challenging, capital is flowing into specific areas. The firm warns of earnings downgrade risks due to competition and potential demand slowdowns, but Eternal's strengths keep it favored.
Investing.com - Morgan Stanley maintains Eternal as its top pick among Indian internet stocks despite an 8% correction in the country's internet market cap index since the end of March 2026.
The firm notes India's internet market cap index has declined 8% from its late March 2026 peak, following a pattern similar to the US Internet market cap index. Stock performance has shown high dispersion over the past month, with Eternal outperforming Swiggy by 11%, Shadowfax outperforming Delhivery by 28%, and Paytm outperforming Pine Labs by 14%.
The private equity and venture capital funding environment remains challenging on a trailing twelve-month basis, down 23% year-over-year. Capital continues to flow into specific areas including instant vertical commerce and instant services.
Morgan Stanley warns that earnings downgrade risks persist due to heightened competition in quick commerce and instant services, as well as a potential demand slowdown in sectors such as travel.
The firm cites Eternal's strong execution, solid balance sheet, and favorable industry growth tailwinds as reasons for maintaining it as a top pick, while acknowledging heightened competition as a key concern.