Street Signs: Free-float markdown, Zomato gains 25% in 4 weeks & more

Free-float markdown may rock the boat for 2 Adani Group firms

Shares of Adani Total Gas and Adani Transmission will hog the limelight on Monday after Morgan Stanley Capital International (MSCI) decides to lower the free float of these two stocks from 25 per cent to 14 per cent and 10 per cent, respectively, in its May index review. In February, the financial index provider deferred lowering the free float as these stocks continually hit the lower circuit, running the risk of a ‘potential replication’ crisis. Analysts say the weighting of Adani Total Gas and Adani Transmission in the MSCI Standard indices could now halve. This could lead to outflows from passive trackers. Both stocks have gained more than 5 per cent these past few weeks but are down sharply year-to-date off the back of allegations of stock manipulation and accounting fraud from New York-based investor Hindenburg Research against Adani Group.

Investors work up an appetite as Zomato gains 25% in 4 weeks

The share price of restaurant aggregator Zomato has gained 25 per cent over the past four weeks, riding on hopes of the company posting double-digit revenue growth and turning profitable in the next two financial years. Analysts say with the exit of Amazon, the food delivery market is now a settled duopoly with Zomato and Swiggy. The market has a very high moat, given the significant capital required to displace the incumbents. “With dominant market share and strong growth in the food delivery business and Hyperpure, we expect Zomato to report a 29 per cent compound annual growth rate over 2022-23 through 2024-25 (FY25). Although the management expects it to be profitable by the second quarter of 2023-24, we believe the company should break even during FY25,” reads a note by Motilal Oswal.

MF foot soldiers: Battle weary, yet fired up

Mutual fund (MF) distributors, or the foot soldiers acting as a link between asset management companies (AMCs) and investors, have a bone to pick with the Association of Mutual Funds in India. At a recent summit, the distributors cornered the association’s heads with a charter of grievances. These included forfeiture of commission on the failure of timely self-disclosures during the pandemic-impacted years, lack of redress mechanism, and multiple registrations with AMCs. The distributors have been at odds after the pause in B30 incentives, given to distributors for bringing in fresh inflows into schemes from cities other than the top 30. However, the industry body has assured of resolving individual-level complaints, even as the capital markets regulator assured of an improved framework for incentives.