Eternal Ltd, formerly known as Zomato, is making headlines again—not for acquisitions or market launches, but for a strategic shift in ownership structure. The company has proposed to cap foreign ownership at 49.5%, down from the current limit of 75%, which would effectively transform it into an Indian-Owned-and-Controlled Company (IOCC).
As the market digests this regulatory pivot, Eternal shares have surged more than 17% in April 2025, signaling strong investor sentiment toward the move. However, this comes with both opportunities and risks.
Eternal’s Stock Performance in April
As of 12:30 PM on Tuesday:
- NSE Trading Price: ₹237.80
- Intraday High: Nearly ₹241.30
- Monthly Gains (April): +17%
- 3-Day Streak: Stock has been climbing steadily for three consecutive trading sessions
Investor interest has been driven by positive outlooks on regulatory flexibility, and how that could impact one of its key business arms—Blinkit.
Proposal to Cap Foreign Ownership
Eternal has submitted a shareholder proposal to limit foreign ownership at 49.5%, a significant drop from the earlier 75% threshold. Based on the latest shareholding data, foreign ownership currently stands at 44.88%, meaning this move could come into effect without requiring divestments from existing stakeholders.
If approved, Eternal would:
- Qualify as an Indian-Owned-and-Controlled Company (IOCC)
- Gain regulatory benefits under India’s FDI framework
- Have greater operational flexibility, especially in e-commerce and quick commerce models
Why Is Indian Ownership Important for Eternal?
India’s FDI regulations restrict inventory-led business models for e-commerce companies that are majority foreign-owned. These norms aim to prevent price manipulation and ensure marketplace neutrality.
By transitioning into an Indian-owned entity, Eternal could legally:
- Hold inventory directly
- Control pricing and supply chains more effectively
- Launch exclusive product categories
- Improve customer experience and delivery speed
This strategic ownership tweak could allow Eternal’s Blinkit business to move away from a third-party marketplace model and adopt an inventory-first approach, similar to traditional retailers.
Impact on Blinkit and Quick Commerce Business
Blinkit is Eternal’s high-growth quick commerce arm that competes with platforms like Zepto and Swiggy Instamart.
Key competitive benefits post-shareholding restructure:
- Better cost control: Inventory-led models reduce procurement inefficiencies
- Margin improvements: EBITDA margins may improve over the next 1–2 years
- Product innovation: Exclusive launches and bundling strategies possible
- Regulatory security: Future-proofing against FDI-based restrictions
The move is also seen as a response to competition, as Zepto and others face similar restrictions due to their foreign-heavy cap tables.
Regulatory Benefits and Long-Term Strategy
Analysts believe that Eternal is preparing for:
- Long-term regulatory compliance
- Operational restructuring focused on domestic scalability
- Increased government alignment, especially amid tightening FDI rules in the e-commerce space
The Indian government has, in recent years, placed more emphasis on domestic control of digital infrastructure, especially in retail and consumer tech platforms. Eternal’s move appears aligned with this policy trend.
Risks from MSCI Index Changes
Despite the long-term positives, there are short-term challenges. The restructuring is expected to trigger passive outflows of up to $600 million, as MSCI may reduce Eternal’s weightage in its standard indices.
Consequences of index weightage downgrade:
- Foreign passive funds may exit
- Stock may witness short-term volatility
- Institutional confidence might dip temporarily
However, some experts believe that the long-term operational gains will outweigh these temporary liquidity concerns.
Zomato Netherlands B.V. Liquidation
Adding to the momentum, Eternal also announced the liquidation of its international arm, Zomato Netherlands B.V., on April 11.
According to filings:
- The Netherlands subsidiary had nil turnover
- Its contribution to group revenue was insignificant
- The move is expected to streamline operations and reduce overheads
This aligns with Eternal’s current push to focus entirely on its domestic operations, particularly in the food delivery and quick commerce sectors.
Conclusion
Eternal’s proposal to reduce foreign ownership marks a watershed moment in its business journey. From being a global tech disruptor under the Zomato brand to now aligning itself with Indian regulatory frameworks and e-commerce realities, the company is pivoting toward deeper localization.
While the immediate impact includes stock market gains and investor optimism, the real test will be in how Eternal executes this structural shift, and how quickly Blinkit can evolve into a profitable, inventory-led player in India’s fast-paced quick commerce arena.
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