New Delhi: Zomato’s holding company Eternal’s share prices fall 4% as the company has to cap foreign ownership to 49.5% to become an Indian-Owned and Controlled Company(IOCC). An overwhelming 99% of the company’s shareholders voted to propose a cap on foreign ownership, which was 47.31% in December 2024. By the end of March 2025, this was down to 44.36%. Though these guidelines have been met, many FIIs have chosen to sell their stakes anyway, allowing domestic entities to invest in the company.
The rationale behind this is the government’s preference for domestic ownership in the retail sector and enhancing operational efficiencies, as the FDI rules in the retail sector don’t allow foreign-owned companies to stock their own products. This forced Blinkit-Zomato’s quick commerce arm- to rely on third-party operators to run the dark stores from where the products are housed and shipped.
Estimates suggest that about $1.3 billion of Eternal’s shares will be offloaded by FIIs, and the company could also be excluded or see a reduction in weightage in the MSCI index. This can, in turn, reduce the company’s value in the long term.
The Deepinder Goyal-led company had earlier raised Rs.8,500 crore from QIP, mainly domestic mutual funds in November 2024, helping it boost domestic ownership, aiding the IOCC transition.
Trade bodies like the Confederation of All India Traders (CAIT) had earlier accused quick commerce firms of distorting retail market prices using foreign capital, giving another reason for the company to initiate this move.
Other e-commerce brands like Nykaa and FirstCry have also capped their foreign ownership to 49% to meet the guidelines and gain better control over their inventories.
Zomato rebranded to Eternal in March of this year as it looks to move its focus from a food delivery platform to a company committed to offering more value to its stakeholders. Currently, the company operates Blinkit- a quick commerce app, Hyperpure- a B2B supplies platform and District– an online ticketing platform, along with Zomato- its flagship food delivery platform.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
