Zomato’s entry into the BSE Sensex 30 marks a watershed moment in India’s corporate landscape, signaling the growing prominence of new-age technology companies in what has traditionally been an old-economy dominated index. As the first startup to join this elite club, Zomato’s inclusion represents a symbolic shift in India’s economic narrative.
The food delivery giant’s remarkable journey to the Sensex has been underpinned by exceptional market performance, with its stock delivering a stellar 126% return over the past year – dramatically outperforming the Sensex’s 10.7% gain. This surge has catapulted Zomato’s market capitalization to ₹2.72 lakh crore, surpassing established players like JSW Steel, which it replaces in the index.
Behind this market enthusiasm lies a compelling story of operational excellence. Zomato has successfully addressed investor concerns about profitability in the technology sector. The company’s July-September quarter results showcase this transformation, with consolidated revenue surging 69% year-on-year to ₹4,799 crore, accompanied by a five-fold increase in net profit to ₹176 crore. This performance validates Zomato’s business model and its ability to scale while improving unit economics.
Strategic initiatives have played a crucial role in this turnaround. The relaunch of Zomato Gold, its subscription program, has proven to be a masterstroke in driving customer engagement and ordering frequency among high-value users. This move demonstrates the company’s ability to innovate and create sustainable revenue streams beyond its core delivery business.
The Sensex inclusion is expected to bring substantial material benefits. Brokerage firm Nuvama projects inflows of $513 million into Zomato stock, reflecting the mandatory buying pressure from index funds and institutional investors who track the Sensex. This increased institutional ownership could potentially reduce stock volatility and provide a more stable shareholding pattern.
From a valuation perspective, expert analysis suggests that investors are pricing in significant future growth, with Zomato trading at 39 times its forecasted FY27 EV/EBITDA. This premium valuation reflects market confidence in the company’s growth trajectory and its potential to capture a larger share of India’s evolving digital economy.
However, Zomato’s first day of Sensex trading brought an unexpected twist, with shares declining by 2.48% to ₹275.20. This movement suggests that while the inclusion is a significant milestone, the market may have already priced in much of the positive news during the stock’s recent rally.
The broader significance of Zomato’s Sensex entry extends beyond the company itself. It sets a precedent for other new-age technology companies and startups, demonstrating that the path to India’s most prestigious stock index is open to innovative business models that can deliver consistent growth and profitability. This inclusion also reflects the evolving nature of the Indian economy, where technology-enabled businesses are increasingly driving growth and value creation.
As Zomato takes its place alongside traditional market leaders like Tata Motors and Asian Paints, it carries the torch for India’s startup ecosystem, potentially paving the way for more technology companies to join the Sensex in the future. This transition marks a pivotal moment in the modernization of India’s equity markets, with others aspiring to follow in their footsteps.
