Morgan Stanley has reaffirmed Eternal as its leading selection within the Indian internet cohort, despite an 8% drop in the nation’s internet market capitalization index from its late March 2026 high. The firm notes the decline mirrors a similar pattern seen in the US internet market cap index.
Over the past month, stock returns in the internet segment have diverged sharply. Morgan Stanley highlights several pairwise performance gaps: Eternal outpaced Swiggy by 11%, Shadowfax outperformed Delhivery by 28%, and Paytm beat Pine Labs by 14%. The bank describes this as high dispersion in stock performance across the group.
On the financing side, private equity and venture capital activity remains subdued on a trailing twelve-month basis, with total funding down 23% year-over-year. Nevertheless, investors are still channeling capital into targeted pockets, specifically instant vertical commerce and instant services, according to the firm.
While endorsing Eternal, Morgan Stanley underscores that downside risks to earnings forecasts persist. The firm points to rising competition in quick commerce and instant services as a source of potential margin and revenue pressure. It also flags a possible slowdown in demand in categories such as travel that could weigh on near-term results.
Despite those concerns, Morgan Stanley cites three key attributes supporting its preference for Eternal: demonstrable execution, a robust balance sheet, and favorable industry growth tailwinds. The firm acknowledges, however, that elevated competition remains an important concern for the company and the sector more broadly.
Bottom line - Morgan Stanley retains Eternal as its top internet stock pick in India on the basis of execution and financial resilience, while noting material risks from competitive dynamics and demand trends in adjacent categories.