Zomato, Nykaa, Paytm, Policybazaar may get large-cap status on AMFI upgrade

Mumbai: Industrial, real estate, technology and chemical stocks are likely to get upgraded to the large-cap category from the mid-cap category in the upcoming semi-annual classification of shares by the Association of Mutual Funds in India (AMFI), said ICICI Securities in a report.

Stocks that have a high probability of getting upgraded to the large-cap category include Mindtree, SRF, IRCTC, Tata Power, Mphasis and Godrej Properties.

ICICI Securities sees a high probability of Zomato, Nykaa parent FSN E-Commerce, Paytm parent One97 Communications and PB Fintech (Policybazaar) being classified as large-cap stocks. Macrotech Developers, Bharat Electronics and JSW Energy have a low probability of getting upgraded to the higher category, the brokerage said.

AMFI announces reclassification of stocks twice a year. The next reclassification is scheduled for the first week of January. The list is valid for the period February to July 2022. Mutual fund managers must consult the AMFI classification to balance their portfolio according to the category requirement.

Recategorisation, however, need not lead to fresh inflows or outflows. It is not necessary that active equity fund managers change stock weightages in their respective portfolios to match the AMFI-classified categories.

Some stocks are likely to get an upgrade to the mid-cap category from small-caps in the upcoming recategorisation, said ICICI Securities.

These include Gujarat Fluorochemicals, Happiest Minds, Central Bank of India, Indian Energy Exchange, National Aluminium, Trident, Prestige Estates, Grindwell Norton and SKF India. Of these, only SKF India has a low probability of being upgraded to the mid-cap segment, said the brokerage.

Yes Bank, Bandhan Bank, Bosch, Lupin, Biocon, Punjab National Bank, Aurobindo Pharma, and Bank of Baroda, among others, are likely to get downgraded to the mid-cap segment from large-caps.

ICICI Securities said the downgrades from large-cap to mid-cap category and from mid-cap to small-cap category are primarily from pharma, auto ancillaries, financials and consumption spaces.