Eternal Ltd shares experienced a notable surge on Tuesday, January 13, gaining as much as 4% and extending their positive momentum for the fifth consecutive trading session. The rally came following the company's release of its shareholding pattern, which revealed significant improvements in foreign investment headroom.

MSCI Weightage Eligibility Improves

According to analyst sales notes, Eternal currently carries only half weight in the MSCI index due to previously low foreign headroom constraints. However, the latest shareholding data shows that foreign headroom has increased substantially and now exceeds the critical 25% threshold.

This development makes the stock eligible for full MSCI weightage, representing a significant upgrade from its current position. The potential change could be implemented during the February MSCI review, which may trigger substantial passive fund inflows.

Potential Investment Impact

Analysts project that the MSCI weightage upgrade could result in passive inflows of approximately $390 million. This substantial capital injection would likely provide additional support to the stock price and increase institutional participation in Eternal's equity.

Analyst Sentiment Remains Strong

Despite recent market corrections, analyst confidence in Eternal remains robust. The investment community continues to maintain overwhelmingly positive recommendations:

Current Trading Performance

Shares of Eternal traded 2.5% higher at ₹292.45, though slightly off their opening highs. The stock has faced headwinds recently, declining nearly 30% from its record high of ₹368.45. This correction has been attributed to concerns regarding the profitability of the company's quick commerce vertical and intensifying competition in the food delivery and quick commerce sectors.

Business Portfolio Context

Eternal Ltd serves as the parent company for two major consumer-facing platforms: Zomato, the food delivery aggregator, and Blinkit, the quick commerce player. Both subsidiaries operate in highly competitive markets that have experienced rapid growth alongside increasing operational challenges and margin pressures.

Eternal has achieved a significant milestone in its journey toward greater international market accessibility, with foreign ownership crossing the critical 25% threshold. This development marks an important step for the company's global investment profile and opens new avenues for institutional participation.

MSCI Eligibility Achievement

The company's foreign ownership structure has now surpassed the 25% requirement, making it eligible for full MSCI weight consideration. This threshold represents a key criterion for index inclusion and reflects growing international investor confidence in the company's prospects.

February Review Implications

The upcoming February MSCI review presents a crucial opportunity for the company. With the foreign ownership requirement now met, the company stands positioned for potential inclusion or upgraded weighting in MSCI indices. This review process could significantly impact the company's accessibility to global institutional investors.

Investment Flow Potential

The achievement of MSCI eligibility could attract substantial passive investments to the company. Market estimates suggest that the full MSCI weight inclusion may result in approximately $390.00 million in passive investment inflows. This potential capital influx represents a significant boost to the company's market liquidity and institutional investor base.

Market Impact

The crossing of the 25% foreign ownership threshold demonstrates growing international recognition and confidence in the company's business model and growth prospects. This milestone enhances the company's profile among global institutional investors and fund managers who track MSCI indices for their investment decisions.