Archive · 24 Jul 2025
Eternal Shares at Risk: $500 Million Outflow Triggered by MSCI Rebalancing
Imagine a company, Eternal, that some people own shares in.
A big company called MSCI decides which companies are important.
Because fewer foreigners own Eternal shares now, MSCI might change its mind about including Eternal.
This could cause some investors to sell, potentially causing the share price to drop.
If many investors sell, the price could drop quickly and significantly.
Jefferies, an expert company, thinks this is because of less foreign investment in Eternal.
It also sees Eternal as a strong company in the food service industry.
Eternal shares may see a $500 million outflow due to MSCI India Standard Index rebalancing.
Foreign ownership in Eternal has decreased to below 43% as of June, down from 52% last June.
If foreign holdings cross 47.65%, Eternal could be removed from MSCI in 2 days, potentially causing a $1 billion outflow.
Foreign ownership has declined over the last year, from 54.82% in June 2024.
Jefferies views Eternal as a play on India's growing food services industry.
- Who
- Investors in Eternal shares and MSCI.
- What
- Potential outflow of funds from Eternal shares due to rebalancing of MSCI India Standard Index.
- When
- MSCI rebalancing announcement scheduled for August 7.
- Where
- India (Eternal shares).
- Why
- Due to decreasing foreign ownership and potential weight cuts in MSCI.
Jefferies View
Market Perception
Impact of Foreign Holdings
Jefferies View
Jefferies highlights the technical aspects relating to foreign ownership.
Market Perception
Not applicable.
- Potential Outflow
- $500 million (estimated)
- MSCI Rebalancing Date
- August 7
- Foreign Ownership (June 2024)
- 52%
- Foreign Ownership (June 2025)
- < 43%
- Foreign Ownership Limit
- 49.5%
- Threshold for Removal from MSCI
- Foreign room below 3.75%