Why Zomato's parent may see $840M outflows from FTSE, MSCI
What's the story
Eternal, Zomato's rebranded avatar, is expecting passive outflows of $840 million.
The expectation comes after global index leaders FTSE and MSCI decided to lower the stock's weightage in their portfolios.
The change comes after a cut in the Foreign Ownership Limit (FOL), restricting foreign investors' shareholding ability in the company.
Index adjustments
FTSE and MSCI to adjust Eternal's stock representation
FTSE announced it will cut Eternal's investability weight from 82.74% to 49.5%, effective May 28, 2025.
The company's shares are currently part of several FTSE indices, including FTSE MPF All World Index, FTSE Global Large Cap Index, and FTSE Emerging Index.
MSCI also announced a FIF change with its May review for Eternal, which could trigger an outflow of $460 million on May 30.
Shareholder decision
Shareholders endorse foreign ownership cap proposal
The company's shares have remained under pressure after a decisive 99% shareholder vote backed the proposal to restrict foreign ownership.
Jefferies estimates the move could trigger outflows of as much as $1.3 billion from Eternal's stock.
The company will remain part of the FTSE and MSCI indices with an unchanged total issued share count of 9,064,966,438, according to FTSE's announcement.
Outflow predictions
IIFL Capital Services predicts significant outflows from FTSE and MSCI
IIFL Capital Services estimates FTSE's adjustment alone could trigger passive outflows of about $380 million (approximately ₹3,235 crore).
MSCI's May review, also likely to factor in the FOL cut, could add another $460 million (around ₹3,917 crore) to this.
Unlike gradual adjustments based on available foreign investment headroom, a direct FOL cut can trigger a full-scale reduction in investability weight in one go.