Chennai: Food tech giant Zomato has made history as the first Indian startup to join the Bombay Stock Exchange (BSE) Sensex 30, replacing JSW Steel in the benchmark index of India’s top 30 companies. However, Zomato stock saw a drop in prices on Monday after becoming part of the elite club.
Zomato's inclusion in the SENSEX follows its strong performance over the past year. The stock has gained 38 per cent in the past six months, 124.79 per cent year-to-date, and 114.29 per cent over the last year. With this, Zomato joined the list of companies, including ITC, Tech Mahindra, HDFC Bank and Reliance Industries among others featured in the benchmark index.
Zomato’s total market capitalization of Rs 2.7 lakh crore surpassed JSW Steel's Rs 2.24 lakh crore. Zomato’s stock had surged 3.6 times since its Rs 9,375-crore IPO in July 2021, when shares were sold at Rs 76 apiece. However, on Monday, following its inclusion in the Sensex 30, Zomato's stock declined by 3.15 per cent to Rs 273.90 on the Bombay Stock Exchange.
The addition to Sensex may bring a funds inflow of $513 million into the stock as passive funds, according to brokerage Nuvama Alternative & Quantitative Research. In November, the National Stock Exchange (NSE) had added Zomato to the futures and options (F&O) stocks list.
During the second quarter of the ongoing fiscal year, Zomato achieved a remarkable 68.5 per cent quarter-on-quarter growth in operating revenue, reaching Rs 4,799 crore from Rs 2,848 crore in Q2 FY24. The Gurugram-based company also recorded a 4.8X increase in net profit to Rs 176 crore in the quarter ending September.
The entry of Zomato, which was founded in 2008, into the Sensex 30 is a significant milestone not only for the company but for the entire Indian startup ecosystem. It dismisses a lot of apprehension about the ecosystem in the minds of global investors. Zomato's elevation to the top club in the market is a demonstration of the potential of startups and it will pave the way for many others to follow suit.
Its arch-rival Swiggy posted Rs 3,601 crore of revenue and a net loss of Rs 625 crore during the second quarter of the current fiscal year. The recently listed firm is currently traded at Rs 592.8 per share and has a total market capitalization of Rs 1,32,695 crore.
Zomato also secured $1 billion from qualified institutional investors (QIIs) last month. According to Entrackr, the investment has provided enough powder for future investments, even as the stock will benefit from index investing now, even though the BSE Sensex remains a smaller representation of India’s investment opportunities than say, the 50 share NSE Nifty.
