Zomato, the prominent food delivery platform, has achieved a significant milestone by becoming the first new-age tech company to be included in the BSE Sensex, India's benchmark 30-share index. This inclusion, effective December 23, 2024, replaces JSW Steel in the index.
Financial Performance and Market Position
Zomato's inclusion in the Sensex reflects its robust financial performance and growing market presence. In Q2 FY25, the company reported a consolidated net profit of ₹176 crore, marking a 389% year-on-year increase from ₹36 crore in the same quarter the previous year. Revenue from operations surged by 68% YoY to ₹4,799 crore, driven by strong performance in key segments.
The company's market capitalization has reached approximately ₹2.64 trillion, positioning it as the 28th most valuable company in India. Notably, Zomato's Sensex weightage stands at 2.77%, ranking 12th among the 30 components, surpassing established consumer giants like Hindustan Unilever, Maruti Suzuki, Asian Paints, and Nestle.
Market Impact and Investor Response
Analysts anticipate that Zomato's entry into the Sensex will attract significant passive inflows, estimated at $513 million, as index funds adjust their portfolios to reflect the new composition. Despite this positive development, Zomato's share price experienced a decline of over 3% on the day of inclusion, which could be attributed to profit-booking by investors following the stock's substantial gains earlier in the year.
Our Opinion on the News
Zomato's inclusion in the BSE Sensex is a landmark event, signaling the growing influence and maturity of tech-driven startups in India's financial markets. This move not only enhances Zomato's visibility among investors but also underscores the shifting dynamics of the Indian economy towards digital and technology sectors.
For the industry, this development may encourage increased investment in tech startups, fostering innovation and competition. However, Zomato must continue to demonstrate sustainable growth and profitability to justify its valuation and maintain investor confidence.
For investors and business professionals, Zomato's Sensex debut offers an opportunity to reassess portfolio strategies, considering the potential of tech-driven enterprises in delivering long-term value. Nonetheless, it is crucial to remain vigilant about market volatility and conduct thorough due diligence when making investment decisions.
Source : Business Standard