AMFI to rejig stock categories: Here are probable upgrades & downgrades

Mutual fund body AMFI is likely to announce the official list of the semi-annual review for the second half of 2022. Prior to this, various brokerage firms and analysts have launched their initial expectations for the same.

The official list from AMFI is expected in the first week of July, which will be applicable from August 2022, till the end of January 2023.

According to brokerage firm B&K Securities, two net listings Life Insurance Corporation of India (LIC) and Adani Wilmar would be added to the large cap categories. B&K has the cut of Rs 47,400 crore for the large cap companies.

Furthermore, about half a dozen companies including Adani Power, Cholamandalam Financial, Bank of Baroda, Hindustan Aeronautics, Bandhan Bank and Page Industries will be upgraded as largecaps from the midcaps' list.

However, Edelweiss Alternative Research believes that Hindustan Aeronautics and Page Industries will not be upgraded to the largecap category.

B&K expects eight stocks - Torrent Pharma, IDBI Bank, HDFC AMC, Godrej Properties, SAIL, Zydus Lifesciences, Jubilant Foodworks & PB Fintech - to be downgraded to midcap universe from the largecaps.

Edelweiss reported that Torrent Pharma and IDBI will remain in the largecap space, whereas both the firms expect Delhivery, Vedant Fashions and Motherson Sumi Wirings to be the new entry in the midcap space.

B&K expects seven stocks to move to midcaps from smallcaps which has the cut off Rs 16,500 crore. The list includes Tata Teleservices, KPR Mills, Tanla Platforms, Poonawalla Fincorp, Phoenix Mills, SKF India and Chambal Fertilizers.

According to B&K Securities, about a dozen stocks will make their entry in the smallcap space after ther downgrade from the midcap segment.

They include Aptus Value Housing, Gillette India, Ajanta Pharma, Alkyl Amines, Gujarat State Petronet, Happiest Minds, GR Infra, IndiaMART, Natco Pharma, UCO Bank, Aditya Birla Sun Life AMC and Nuvoco Vistas.

Furthermore, Edelweiss believes that recent listings such as Campus Activewear, Rainbow Children's Medicare, Paradeep Phosphates, Prudent Corporate Advisory, Ethos, AGS Transact, Vedana Learning and Venus pipes will join the smallcap universe.

As per the Circular released by Sebi in October 2017, the listed stocks must be strictly categorised into baskets with a well-defined classification of largecap, midcap and smallcap stocks.

This was to ensure uniformity in respect of the investment universe for equity mutual fund schemes. Sebi has also stipulated that AMFI shall prepare the list of stocks in this regard.

Accordingly, AMFI in consultation with SEBI and Stock Exchanges, prepares the list of stocks with categorization based on the market capitalization provided by BSE, NSE and MSEI.