Nifty rejig: Zomato, Jio Financial, Britannia, BPCL shares fall up to 4%; here’s why

Shares of Zomato, Jio Financial Services, Britannia Industries, and Bharat Petroleum Corporation remained in focus today after National Stock Exchange (NSE) announced changes to Nifty 50, Nifty 100, and Nifty 200 indexes, effective March 28. As part of the rebalancing, Zomato and Jio Financial Services shares will enter the benchmark Nifty 50 index, replacing BPCL and Britannia. In December 2024, Zomato entered the BSE Sensex pack, replacing JSW Steel, and become the first new-age tech company to join the 30-share index.

Despite this positive development, shares of Zomato and Jio Financial Services were reeling under selling pressure in sync with broader market. While shares of Zomato declined as much as 4.3% to hit a low of ₹220.25 on the BSE, Jio Financial share price slipped 2.1% to ₹228.75 level. On the other hand, shares of Britannia dropped 1.6% to ₹4,751, whereas state-owned BPCL stock tumbled 1.1% to ₹248.75.

Meanwhile, the BSE benchmark Sensex and NSE Nifty dropped over 1% amid broad-based selling across indices, tracking weak cues from global peers.

Index changes to further boost Nifty50 valuation

ICICI Securities in a report said that the latest index changes to further boost Nifty50 valuation by entry of new-age stocks. “BPCL and Britannia with trailing P/E of 8x and 57x, respectively, will be replaced by Zomato and Jio Financials with trailing P/E of 320x and 96x, respectively by end of Mar’25 within the NIFTY50 index as per the latest announcement by NSE indices,” the report noted.

As per the report, the latest index change could inflate Nifty50 P/E by 2.5% on a trailing basis from 22.1x to 22.6x. This may result in buying worth ₹5,900 crore (3x ADTO) for Zomato and ₹3,000 crore (5x ADTO) for Jio Financials, while selling worth ₹2,300 crore (11x ADTO) for Britannia and ₹1,900 crore (6x ADTO) for BPCL from NIFTY50 exchange traded funds (ETF). ADTO stands for the total activity on the stock exchanges of BSE, NSE.

The report also highlighted that while stocks have become expensive compared to their past P/E or P/B ratios in general, the index valuations have got a further boost from the index constituent changes. Since 2018, new-age stocks related to areas such as insurance, fintech, organised retail along with consumer and healthcare companies have entered Nifty50 at the cost of old economy stocks from sectors such as oil & gas, industrials and traditional lenders.

“The trend is peculiar given that the divergence of P/E of incoming (median P/E of 60x) and outgoing stocks (median P/E of 10x) at the time of index changes was very high and above normal levels. Hence, on like-to-like basis, NIFTY50 index would have appeared 8-10% cheaper with a trailing P/E of 20x and FY26 P/E of 17.9x, assuming 2018 index constituents had not changed,” the report highlighted.

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