Zomato Share Price: Why FIIs Are Reducing Their Stake in Eternal?

SYNOPSIS: Foreign shareholding in Eternal has declined steadily as ownership was capped to retain Indian control, enabling an inventory-led quick commerce model, while limiting further FII participation.

Shares of one of the leading online Food Service platforms in terms of the value of food sold are in focus on the stock exchanges. The company has seen a decline in foreign institutional ownership by over 18 percent over the past seven quarters. What’s driving this steady reduction in FII holdings at Eternal? Here’s a closer look.

With a market cap of Rs. 2.88 lakh crores, shares of Eternal Limited closed in the green at Rs. 299.2 on Wednesday, up by around 2 percent, as against its previous closing price of Rs. 294.5 on BSE. The stock has delivered positive returns of around 23 percent in the last one year, and has gained by over 12 percent in the last one month.

Decline in FII ownership

As per the December 2025 shareholding pattern, FIIs hold a 36.24 percent stake in the company, while DIIs hold a 32.61 percent stake. Further, the Government holding stands at 0.1 percent, Retail Investors at 25.47 percent, and Others at 5.58 percent.

Foreign investor ownership in Eternal Limited has been trending lower for nearly two years, pointing to a mix of regulatory decisions and structural index-related flows. FII holding, which stood at 55.11 percent in March 2024, has steadily reduced every quarter, falling from 54.11 percent in June 2024 to 36.24 percent by December 2025. This represents a cumulative decline of 18.87 percentage points over seven consecutive quarters.

A major contributor to this decline was a significant block deal in August 2025, when Antfin Singapore Holding Pte Limited, backed by Alibaba, reportedly offloaded its entire stake in Eternal via a block deal estimated at nearly Rs. 5,375 crores. The sale involved around 18.84 crore equity shares, with the floor price set at Rs. 285 per share.

What’s Driving FII Reduction?

Beyond large exits, this broader trend also aligns with a strategic decision taken by Eternal’s board in April 2025 to cap foreign shareholding at 49.5 percent. The move was aimed at preserving the company’s classification as an Indian-Owned and Controlled Company (IOCC) under FEMA regulations, a move that offers greater operational flexibility for its quick commerce arm, Blinkit.

Under India’s FDI framework, e-commerce entities with foreign ownership exceeding 50 percent are restricted to a marketplace model and are not allowed to hold inventory. By maintaining IOCC status, Eternal gains the ability to operate Blinkit through an inventory-led model, allowing it to own and manage inventory rather than merely acting as an intermediary between buyers and sellers.

An inventory-based approach provides tighter control over supply chains, product availability, and pricing, while also supporting better margin management. Over time, this structure could improve unit economics and profitability in quick commerce, where execution efficiency and speed are critical.

That said, capping foreign ownership naturally limits participation from overseas investors. This structural constraint has likely contributed to the gradual and consistent reduction in FII holdings seen across multiple quarters.

Financials

In Q2 FY26, Eternal reported a consolidated revenue from operations of Rs. 13,590 crores, a growth of around 90 percent QoQ and 183 percent YoY. Meanwhile, its net profit for the quarter stood at Rs. 65 crores, representing an impressive rise of around 160 percent QoQ but a decline of 63 percent YoY.

Eternal Limited provide restaurant partners with industry-specific marketing tools to acquire customers, providing delivery partners with transparent and flexible earning opportunities.

The company’s technology platform connects customers, restaurant partners and delivery partners, and other intermediaries such as call centre operators serving their multiple needs. Customers use the platform to search/discover restaurants, read/write reviews, upload photos, order food, book tables and make payments while dining out.

As per Kotak Securities, Blinkit currently dominates with a 45-52 percent market share, followed by Instamart (25-27 percent) and Zepto (21-23 percent). Further, as of Q2 FY26, the company’s network expansion continued with 272 net new stores added, taking the total store count to 1,816 stores as of the end of the quarter.

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