Life Insurance Corporation of India (LIC), the newly listed firm with the seventh-largest market capitalisation on the BSE is likely to get the large-cap tag in the next review by AMFI (Association of Mutual Funds in India). A pre-emptive analysis of the semi-annual potential changes to the AMFI market cap categorization of stocks by Edelweiss has listed LIC along with Adani Wilmar as the potential stocks to get the large-cap tag. AMFI is expected to release the new categorisation in the first week of next month.
Likely to get large-cap tag
Apart from LIC and Adani Wilmar, the two recently listed stocks that may be classified as large-caps, Edelweiss Alternative Research has picked four other stocks that could make the cut. These include Adani Power, which has a market cap of Rs 1.18 lakh crore, and Cholamandalam Investment and Finance Company, which has a market cap of Rs 55,200 crore. Further, Bank of Baroda with a market cap of Rs 52,300 crore is also expected to make the cut along with Bandhan Bank, whose market capitalization stands at Rs 53,300 crore.
Recategorisation from large-cap to mid-cap
Stocks that could be moved down to the mid-cap category from the large-cap one include PB Fintech (PolicyBazaar), which has a market capitalization of Rs 29,700 crore. PB Fintech’s share price has tanked 30.5% in 2022 so far. Zydus Lifesciences, Jubilant Foods, Steel Authority of India (SAIL), Godrej Properties, and HDFC AMC are also expected to be brought down. All the stocks mentioned above have fallen more than 20% so far this year.
Edelweiss Alternative research also sees the possibility of newly listed Delhivery, Vedant Fashions (Manyavar), along with Motherson Sumi Wiring entering the mid-cap basket.
Small-cap to mid-cap
Tata Teleservices (Maharashtra) is among the stocks that are currently categorised as small-caps but could be upgraded to the mid-cap category. Others on the list include KPR Mill, Tanla Platforms, Poonawala Fincorp, Phoenix Mills, and Chambal Fertilisers.
Down to small-cap
Ten stocks have been identified that could potentially be moved to the small-cap category from the current mid-cap tag. Some of these are Nuvoco Vistas, UCO Bank, Aditya Birla AMC, Natco Pharma, Happiest Minds, Ajanta Pharma, among others. Further, Campus Activewear, Rainbow Children’s Medicare, Paradeep Phosphates, Prudent Corporate Advisors, Ethos, Veranda Learnings, and Venus Pipes are among the newly listed companies that are likely to get the small-cap categorisation.
The list of stocks under large-cap, mid-cap, and small-cap basket is prepared by AMFI on a semi-annual basis in consultation with SEBI, BSE, and NSE. Large-cap companies are the top 100 companies listed on the bourses while midcap companies include the 101st to 250th company by market capitalization. The rest are small-caps. It is important to note that categorisation or re-categorisation of stocks does not necessarily mean inflow of funds. “An active equity fund manager may choose to add/remove or increase/reduce weightings on stocks from their respective portfolios, depending upon their fundamental rationale,” said Abhilash Pagaria, Head, Edelweiss Alternative & Quantitative Research.