Sensex December Rejig: Zomato Joins BSE Sensex, Likely To See Inflows Worth $513 Mn; Stock In Focus

Zomato, the food delivery giant, becomes the first new-age tech stock to be included in the benchmark BSE Sensex. This entry, effective from December 23, came as part of the half-yearly rebalancing of the 30-share index. Replacing JSW Steel, Zomato's inclusion marks a shift in the Indian equity market. However, despite this milestone, Zomato's share price fell by over 3% on Monday.

Zomato Inclusion

According to Nuvama Alternative & Quantitative Research, Zomato's entry into the Sensex is anticipated to attract passive inflows of $513 million, while JSW Steel's exit is expected to lead to outflows of $252 million. The adjustment officially took effect at the close of Friday, December 20, as the BSE Sensex reshuffled its components.

Zomato Share Price

Zomato share price witnessed a decline in early trading on Monday despite inclusion in the BSE Sensex index. The stock fell as much as 3.08% to Rs 273.15 per share before recovering slightly. This dip surprised many, given the expected inflows tied to its Sensex entry. By 10:30 am on the National Stock Exchange (NSE), Zomato's stock was trading at Rs 280.50, down 0.60%.

The decline could be attributed to profit booking by investors after Zomato's performance this year. Additionally, the weightage adjustments following Sensex rebalancing often result in short-term price fluctuations.

Zomato has been a star performer in the Indian stock market, delivering stellar returns over the past two years. Over the last six months, Zomato's stock price has surged by 43%, outperforming the largely flat performance of the Sensex during the same period. On a year-to-date (YTD) basis, the stock has provided multibagger returns of over 126%. In a span of two years, Zomato shares have skyrocketed by an impressive 350%.

As of Friday, Zomato's shares closed 2.29% lower at Rs 281.85 on the BSE, bringing its market capitalization to Rs 2,71,995 crore. This valuation surpasses several stalwarts, including Tata Motors, Adani Enterprises, Asian Paints, Coal India, and Bajaj Auto.

Financial Growth

Zomato's financial performance has been a key driver of its rise in the stock market. In Q2 FY25, the company reported a consolidated net profit of Rs 176 crore, representing a 389% year-on-year (YoY) growth from Rs 36 crore in the same quarter last year.

Revenue from operations soared 68% YoY to Rs 4,799 crore during the quarter. The company's adjusted EBITDA witnessed a dramatic jump from Rs 41 crore in Q2 FY24 to Rs 331 crore in Q2 FY25. One of the standout metrics was the Gross Order Value (GOV) across Zomato's B2C businesses, which grew by 55% YoY to Rs 17,670 crore in Q2 FY25.

Zomato's entry into the Sensex is expected to enhance its visibility and attract a broader base of institutional investors. The passive inflows tied to index funds tracking the Sensex will further strengthen its liquidity. However, the company will need to maintain its growth momentum and continue delivering robust financial results to justify its lofty valuations.