Zomato Shares Surge 7% as Company Set to Join BSE Sensex on December 23 - Read Now 

Zomato's stock experienced a significant surge of 7% on Monday, reaching a day's high of Rs 282.85 on the Bombay Stock Exchange (BSE). The surge came after the food delivery giant was announced as a new addition to the prestigious BSE Sensex index. Effective December 23, Zomato will replace JSW Steel in the 30-stock benchmark index, marking a pivotal moment in the company's journey.

This move follows a stellar performance by Zomato, with its stock delivering a remarkable 130% return over the last 12 months. This outperformance comes at a time when the Sensex has posted a more modest 20% return during the same period, further solidifying Zomato's position as an emerging leader in the Indian stock market.

Zomato’s Rapid Rise: A 130% Return Outshines the Sensex

Zomato's rapid rise can be attributed to its strong financial performance, which has bolstered investor confidence. Over the past year, Zomato has significantly outperformed many of its peers, including JSW Steel, which recorded a 27% return over the same period. Zomato's inclusion in the Sensex not only highlights its growth trajectory but also signals that the company is now considered one of the key players in the Indian market.

The stock's surge is attributed to multiple factors, including strong earnings growth, a shift in market sentiment towards food delivery stocks, and the company's successful strategy to capture market share in the competitive food delivery sector.

BSE Sensex Reconstitution: Zomato to Replace JSW Steel

On Friday, Asia Index Private Ltd, a wholly-owned subsidiary of BSE, announced its plans to reconstitute multiple indices, including the BSE Sensex, BSE 100, BSE Sensex 50, and BSE Sensex Next 50. As part of these changes, Zomato will replace JSW Steel in the 30-stock Sensex index, effective December 23. This move is part of the ongoing efforts to ensure that the Sensex reflects emerging market leaders and companies that have demonstrated robust growth and performance.

Zomato’s entry into the Sensex index is seen as a significant milestone for the company and signals the increasing importance of technology-driven, consumer-focused businesses in India’s financial markets. In contrast, JSW Steel, the outgoing constituent of the Sensex, has seen a slower growth rate over the past year, with a return of 27%, compared to Zomato's 130%.

Zomato's Impressive Financial Performance Drives Stock Surge

Zomato's strong financial performance in recent quarters has played a key role in driving its stock price higher. In the July-September quarter (Q2 FY24), Zomato reported an extraordinary 389% growth in its consolidated net profit, which stood at Rs 176 crore, compared to Rs 36 crore in the same period last year. The company’s revenue from operations surged by 69% year-on-year (YoY) to Rs 4,799 crore in Q2, up from Rs 2,848 crore a year earlier. This strong growth was also reflected in a significant sequential rise from Rs 4,206 crore in the previous quarter.

These impressive results have further fueled investor optimism, as Zomato continues to show resilience in the competitive food delivery sector. The company’s ability to expand its market share and improve its financial metrics makes it an attractive option for investors, contributing to its recent stock surge.

Technical Outlook: Zomato Poised for Further Growth

Analysts are also optimistic about Zomato’s future growth, as the stock has shown strong technical indicators. Anshul Jain, Head of Research at Lakshmishree Investments, highlighted the bullish setup on Zomato’s weekly charts, with the stock consolidating in a bullish flat base range pattern for the past 17 weeks. This consolidation is seen as a strong indicator of potential upward momentum.

According to Jain, Zomato could experience further upward movement in the coming weeks, with a breakout above the key Rs 300 level serving as a potential launchpad. If the stock breaks past this level, analysts predict that it could surge towards the Rs 450 mark. This would represent a significant milestone for Zomato, particularly for long-term investors looking to capitalize on the company's growth story.

BSE Index Changes: Jio Financial, Adani Green, and Others Added to BSE 100

In addition to Zomato’s inclusion in the Sensex, BSE also announced a series of other changes across its indices. As part of the BSE 100 index reconstitution, several major companies, including Jio Financial Services, Suzlon Energy, Adani Green Energy, Adani Power, Samvardhana Motherson, and PB Fintech, will be added. On the other hand, companies such as Ashok Leyland, PI Industries, IDFC First Bank, IRCTC, UPL, and APL Apollo Tubes will be excluded from the index.

These changes reflect the evolving dynamics of India’s equity markets and the growing prominence of technology-driven companies like Zomato. The reconstitution is expected to better align the BSE indices with the performance and growth prospects of emerging market leaders.

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