Rebalancing: Adani Enterprises likely to dislodge Wipro from Sensex

Semi-annual rebalancing of BSE indices on Friday

Adani Enterprises is expected to replace Wipro in the benchmark Sensex. A formal announcement in this regard is expected on Friday as part of the semi-annual rebalancing exercise for BSE indices.

This is the first time any company owned by the Gautam Adani-group will be added to the benchmark 30-share index. The move will result in inflows worth nearly Rs 1,000 crore from passive funds tracking the Sensex. Meanwhile, Wipro could see outflows of close to Rs 500 crore, according to an analysis done by IIFL Alternative Research. Shares of Adani Enterprises (AEL) are up 7.5 per cent so far this year, while Wipro is down more than 3 per cent. AEL’s inclusion to the Sensex could push up the index’s valuation.

 

Currently, the Adani group flagship trades at a 12-month forward price-to-earnings (P/E) multiple of 57 times. By comparison,
software exporter Wipro trades at 19.7x largely in line with Sensex’s 19.9x. The consensus price target for AEL according to Bloomberg is Rs 4,069, implying a 30 per cent upside over its last close of Rs 3,140. AEL and Adani Ports and Special Economic Zone are already part of the more widely tracked Nifty50 index. Inclusion to Sensex, will further broaden AEL’s investor base. 
 

AEL had two chances at getting added to the Sensex last year. However, the sharp sell off in the stock following the report by Hin­den­burg Research spoiled its chances. 
 

In July 2023, AEL was expected to be added to the Sensex after the merger between HDFC Bank and HDFC created an ope­ning.
Ho­wever, JSW stole a march over it. As per IIFL Alternative Research, five additions and deletions are expected to the BSE 100 index. Here, Jio Financial Services, Adani Green Energy, REC, Adani Po­wer and Adani Energy Solut­ions are seen dislodging Page Industries, SBI Cards and Payment Services, ICICI Pru­dential Life Insurance Com­pany, Zee Entertainment Ente­rp­rises and Jubilant FoodWorks.