Eternal, the food delivery platform formerly known as Zomato, is poised to experience substantial passive outflows of around $840 million due to an upcoming index rebalancing, according to research by IIFL Capital Services.
The anticipated change in fund allocations is tied to adjustments in benchmark indices that typically attract investments from passive funds, such as exchange-traded funds (ETFs) and index funds. These adjustments are routine but can significantly affect companies included or excluded from major indices.
Such outflows occur when index-tracking funds are required to sell holdings of a company that is reweighted or removed from an index. In Eternal’s case, the $840 million figure represents an estimate of the volume of shares potentially offloaded by these passive investment vehicles.
This development comes amid a broader context of volatility in equity markets, where companies experience sharp changes in valuation based on index compositions. While the rebranding from Zomato to Eternal signals efforts to diversify and move beyond food delivery, the company will need to navigate the impact of these outflows on its stock performance and investor sentiment.
The exact timing and scale of the rebalancing were not detailed in IIFL’s note, but market analysts suggest that investors should closely monitor how Eternal prepares for potential liquidity events of this magnitude.
As of now, Eternal has not issued an official statement regarding the projected outflows or the potential implications for its stock and broader business operations.
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