Food delivery major Swiggy has seen its aggregate foreign shareholding dip below the 50 per cent threshold, a development that could impact its inclusion factor in global indices like the MSCI India Index, according to JM Financial.
Foreign Shareholding Threshold Breached
For the first time, Swiggy's total foreign shareholding, encompassing FPI, FDI, and other indirect foreign investments, has fallen to 49.76 per cent of its fully diluted paid-up equity capital. While this is a crucial step towards potentially qualifying as an Indian-Owned-and-Controlled Company (IOCC) under FEMA regulations, JM Financial emphasizes that it is not sufficient on its own.
The domestic brokerage highlights that Swiggy must complete requisite governance changes, demonstrating that ownership and control are firmly vested with resident Indian entities. This could involve modifications to board composition, voting rights, and other control provisions within its Articles of Association, requiring necessary shareholder approvals.
The 'Eternal' Precedent and MSCI Weights
JM Financial drew parallels to the case of 'Eternal Ltd', which capped foreign ownership at 49.5 per cent in May 2025. Following this, MSCI assigned Eternal only a half weight in its index for several quarters, restoring it to full weight only in February 2026 once sufficient float became available to foreign investors.
"We believe Swiggy will need to further reduce its foreign ownership before capping it to avoid impact on index weightage," JM Financial stated, suggesting a need for more than just crossing the 50% mark.
The brokerage also noted that if Swiggy formalizes a foreign holding cap below 50 per cent, the residual foreign room for incremental FPI buyers could shrink significantly, directly affecting its Foreign Inclusion Factor in both the MSCI India Index and FTSE Global Equity Index.
Path to IOCC Status and Valuation
According to JM Financial's interpretation of official requirements, the eligibility test for IOCC status is based on the ownership and control position at the end of March of the previous fiscal year. Consequently, even if Swiggy completes the necessary governance changes and foreign shareholding cap in the coming months, IOCC transition is unlikely before the end of March 2027.
Despite an exchange filing clarifying that the reduction in foreign shareholding doesn't alter Swiggy's ownership, control, management, or operating structure, the FEMA assessment timeline remains a critical factor.
Regarding Swiggy's valuation, JM Financial currently assigns zero value to its Instamart, supply chain, and platform innovation segments due to a lack of turnaround visibility and increasing probability of prolonged value destruction. Cash has also been excluded from the valuation, anticipating its depletion due to continued losses.
The firm values Swiggy's food delivery business at 35 times adjusted EBITDA and the out-of-home segment at 25 times EV/adjusted EBITDA, yielding a June 2027 target of Rs 250.