Jio Financial, Zomato Poised to Join Nifty50 Index: Analysts Predict Inflows and Exclusions
14th Jan 2025
Jio Financial and Zomato Likely to Replace BPCL, Britannia in Nifty50
Jio Financial Services Ltd and Zomato Ltd are expected to be included in the Nifty50 Index during the upcoming rejig of the benchmark index, according to a report from JM Financial Ltd. The announcement on the changes is likely to come in February 2025, with the changes effective from March 31, 2025.
Estimated Inflows and Outflows
According to JM Financial's report, Zomato and Jio Financial Services are likely to witness inflows of $620 million and $356 billion, respectively, upon their inclusion. Meanwhile, the likely exclusions of BPCL and Britannia may see outflows of $212 million and $229 million, respectively.
Methodology for Index Changes
"For the March rebalancing, the index provider assumes an average free-float marketcap that prevailed between the August 1 to January 31 period," said JM. Based on the latest average free-float market cap, these changes are expected in the Nifty50 index.
Ahead of JM Financials' prediction, Nuvama Alternative and Quantitative Research had also projected Zomato's inclusion in the benchmark index, though they had predicted the exclusion of Eicher Motors Ltd instead of Britannia. BPCL remains the likely common exclusion in both reports.
Shares of Zomato have seen a sharp correction of around 25% from its 52-week high since its inclusion in the Nifty50 index. Similarly, Jio Financial Services has wiped out nearly one-third of its value from its 52-week high.
Analysts' Views on Jio Financial and Zomato
Jio Financial Services is set to enter the asset management business through a joint venture with Blackrock. KR Choksey Finserv has a 'hold' rating on Jio Financial Service with a target price of Rs 345, citing concerns over asset quality and NIMs for NBFCs.
Geojit Financial Services also maintained a 'hold' rating on Jio Financial with a target price of Rs 347, noting its premium valuations. Brokerage firms will share the latest views and targets following the company's Q3 results, which are due later this week.
For Zomato, Anand Rathi Shares and Stock Brokers expects about 5% QoQ growth in the food delivery segment, with a 40-50 bps improvement in the adjusted Ebitda margin. It also expects 20% QoQ growth in the quick commerce segment, with margins contracting 80-100 bps due to heightened competition and Zepto's cash burn.
Equirus Securities projects 6% QoQ GOV growth in food delivery and a strong 15% QoQ GOV growth in Blinkit, with sequential adjusted Ebitda margin improvement of 4bps and 21bps, respectively. Zomato continues to remain among the top picks of Anand Rathi, while Equirus Securities has given it a 'long' rating with a target price of Rs 315.
Jio Financial Services Ltd and Zomato Ltd are expected to be included in the Nifty50 Index during the upcoming rejig of the benchmark index, according to a report from JM Financial Ltd. The announcement on the changes is likely to come in February 2025, with the changes effective from March 31, 2025.
Estimated Inflows and Outflows
According to JM Financial's report, Zomato and Jio Financial Services are likely to witness inflows of $620 million and $356 billion, respectively, upon their inclusion. Meanwhile, the likely exclusions of BPCL and Britannia may see outflows of $212 million and $229 million, respectively.
Methodology for Index Changes
"For the March rebalancing, the index provider assumes an average free-float marketcap that prevailed between the August 1 to January 31 period," said JM. Based on the latest average free-float market cap, these changes are expected in the Nifty50 index.
Ahead of JM Financials' prediction, Nuvama Alternative and Quantitative Research had also projected Zomato's inclusion in the benchmark index, though they had predicted the exclusion of Eicher Motors Ltd instead of Britannia. BPCL remains the likely common exclusion in both reports.
Shares of Zomato have seen a sharp correction of around 25% from its 52-week high since its inclusion in the Nifty50 index. Similarly, Jio Financial Services has wiped out nearly one-third of its value from its 52-week high.
Analysts' Views on Jio Financial and Zomato
Jio Financial Services is set to enter the asset management business through a joint venture with Blackrock. KR Choksey Finserv has a 'hold' rating on Jio Financial Service with a target price of Rs 345, citing concerns over asset quality and NIMs for NBFCs.
Geojit Financial Services also maintained a 'hold' rating on Jio Financial with a target price of Rs 347, noting its premium valuations. Brokerage firms will share the latest views and targets following the company's Q3 results, which are due later this week.
For Zomato, Anand Rathi Shares and Stock Brokers expects about 5% QoQ growth in the food delivery segment, with a 40-50 bps improvement in the adjusted Ebitda margin. It also expects 20% QoQ growth in the quick commerce segment, with margins contracting 80-100 bps due to heightened competition and Zepto's cash burn.
Equirus Securities projects 6% QoQ GOV growth in food delivery and a strong 15% QoQ GOV growth in Blinkit, with sequential adjusted Ebitda margin improvement of 4bps and 21bps, respectively. Zomato continues to remain among the top picks of Anand Rathi, while Equirus Securities has given it a 'long' rating with a target price of Rs 315.