6 New Entries in Largecap Category Upgraded From Midcap Category

6 Midcap Stocks Enter the Largecap List

Introduction

In this article, we are going to see 6 new entries in Largecap Category upgraded from Midcap category as per SEBIs new categorization of stocks published on June 30, 2019.

6 New Entries in Largecap Category Upgraded From Midcap Category

As per the categorization done by SEBI, Top 100 ranked companies are Large Cap companies, ranking from 101 to 250 are Mid Cap Companies and ranking above 250 are the Small Cap Companies. The ranking is according to the Market Capitalisation of these companies. Where, Market Capitalisation = No. of Shares Issued * Current Share Price

As per the new categorisation of companies published by SEBI, there are 6 new entries in Largecap category upgraded from Midcap category. That is 6 midcap companies enter the largecap list.

Which are these 6 new entries in Largecap category?

Let us see which are those 6 new large cap stocks :

Punjab National Bank

• After Nirav Modi and Mehul Choksi Scam, Punjab National Bank (PNB) stock price had adversely impacted. Due to the degradation in its market capitalisation, PNB stock was downgraded from Large Cap category to Midcap category.
• But, PNB stock seems to be on the path of recovery. The bank is focusing on the required provisioning for NPAs. Interest rates have also come down. In addition, the bank has booked returns from government securities and mark-to-market profits which can be a positive sign for the bank.
• Therefore, the PNB stock has seen a decent upgradation in its market cap over last 6-months. Market cap has grown from Rs.21,909 Cr in Dec-18 to Rs.33,444 Cr in June-19 recently. PNB’s ranking has upgraded by 43 numbers ie. from rank 127 (Dec-18) to 84 (June-19).

IDBI Bank

• In January-2019, Life Insurance Corporation (LIC) has completed an acquisition of 51% controlling stake in IDBI. So the entry of LIC as a controlling promoter in IDBI can be seen as a positive sign despite of the stressed balance sheet of the bank.
• In Dec-18, IDBI bank was having a market cap of Rs.25,097 Cr. As per the revised list in June-19, its market cap has increased to Rs.31,636 Cr. The bank’s ranking is upgraded from 116 to 87.
• But, the market cap of the stock has eroded once again to Rs.27,000 Cr currently. So in the coming review by SEBI as per recategorization of stocks, IDBI bank may get downgraded back to Midcap category from Largecap category in Dec-19 list.
• The current upgradation is only becuause of a strong promoters’ backing of LIC for the bank. In case of any capital requirement by IDBI, LIC is in a position to support the bank.

Power Finance Corporation

• Power Finance Corporation (PFC) is a financial institution dedicated to power sector financing and committed to the integrated development of the power and associated sectors. It is registered as a NBFC with the RBI.
• The Ministry of Power, Central Electricity Authority and PFC are working together to facilitate development of Ultra Mega Power Projects.
• The stock has seen a quite good upgradation in the market cap from Rs.22,700 Cr in Dec-18 to Rs.30,231 in June-19. The ranking of PFC is improved from 123 to 94 ie. by 29 ranks which is a very positive sign for the company.
• The upgradation in market cap can be mainly because of the improved government investment in power and associated sectors. As a result, the level of buying by the institutional investors is increased considerably over the last 6-months.

Torrent Pharmaceuticals Ltd

• Torrent Pharmaceuticals is one of the leading Indian Pharmaceutical Company engaged in research, development, manufacturing and marketing of generic pharmaceutical formulations. It is a leader in cardiovascular and central nervous system segments.
• In Dec-18, Torrent Pharmaceuticals was having a market cap of Rs.27,943 Cr. As per the revised list in June-19, its market cap has increased to Rs.29,565 Cr. The bank’s ranking is upgraded from 101 to 97.
• As per Dec-18 categorization of stocks, Torrent Pharmaceuticals was the biggest Midcap compay ranked at 101 according to the market cap.
• But, after June-19, market cap of the stock has badly eroded and has come down to almost Rs.26,139 Cr.

ABB India

• ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact.
• As far as the product portfolio of the company is concerned, it includes power products, power systems, automation products, robotics etc.
• The upgradation in the market cap of ABB India is from Rs.27,548 Cr in Dec-18 to Rs.29,154 in June-19. The ranking of ABB is upgraded from 105 to 98.
• The current market cap of the company is Rs.30,800 Cr. As far as the consumption theme is considered, this stock is with a positive buying approach.

ACC Ltd

• ACC is India’s foremost manufacturer of cement and concrete. It has been a pioneer in the manufacturing of cement and concrete.
• The company is a trendsetter in many areas of cement and concrete technology including improvements in raw material utilisation, process improvement, energy conservation and development of high performance concretes.
• Market capitalisation of ACC has increased from Rs.27,873 Cr in Dec-18 to Rs.28,919 Cr in June-19. The ranking is increased by just 3 numbers from 103 to 100. That is ACC is currently the smallest large cap company according to the market cap.
• With the investment growth in infrastructure and allied segments, ACC can be benefited from the same. Also, ACC has shown a consistent growth in the net sales as well as net profit numbers over last 3 years.

Summary

• All the above 6 stocks are now included in the Nifty Next 50 index. This can be seen as a positive sign for these stocks being a part of Nifty Next 50.
• As the asset under management of Index funds or ETFs will go on increasing, we can see the corresponding improvement in the buying of these 6 stocks by the Institutional investors.
• However, retail investors should not invest in these stocks without a proper advice from their financial advisors.