Kotak Mahindra Bank, Tata Motors DVR shares up on inclusion in Sensex

NEW DELHI: Shares of Kotak Mahindra Bank and Tata Motors DVR were trading higher in early trade after these stocks became part of the BSE benchmark Sensex from Monday.

Kotak Mahindra Bank was trading 0.38 per cent up at Rs 989.25 around 9.20 am (IST), while Tata Motors DVR was up 0.28 per cent at Rs 283.55 at around the same time.

Benchmark BSE Sensex was up 153 points at 31,209.

On the other hand, GAIL (India) was excluded from the benchmark index with effect from June 19. Shares of the company was up 0.66 per cent at Rs 380.35 in the early trade.

According to Motilal Oswal, Sensex EPS for FY18/FY19 will see a downgrade of 1.5 per cent and 1.4 per cent, primarily due to a higher increase in free float market cap of 2.7 per cent compared to a rise of 1.1 per cent and 1.3 per cent in free float PAT for FY18/FY19. Kotak Mahindra Bank’s free float market cap is 4.4x of GAIL India.

“We now estimate Sensex EPS at Rs 1,557 for FY18 (+15.4 per cent) and Rs 1,895 for FY19 (up 21.7 per cent). Sensex trades at a P/E of 19.7x on FY18E earnings based on current composition; this will expand to P/E of 20x post the reshuffle. We have recently downgraded GAIL India to Sell,” the brokerage house said.

Tata Motors with differential voting rights is the first DVR to be included in the Sensex. Tata Motors DVR has been part of the benchmark Nifty index since April 2016. DVRs differ from common equity shares in terms of voting rights and dividend.