AMFI recategorisation: Hyundai, BHFL poised for Largecap entry, says Nuvama

As per the circular released by markets regulator Sebi in October 2017, the listed stocks must be strictly categorised into baskets with a well-defined classification of Largecap, Midcap, and Smallcap

Newly listed companies are poised to make waves in the upcoming stock re-categorisations, slated for early January 2025 by the Association of Mutual Funds in India (AMFI). Changes will take effect from February 1, 2025, based on market data from July 1 to December 31, 2024. 

 

According to Abhilash Pagaria, head of alternative & quantitative research, Nuvama, Hyundai Motor India and Bajaj Housing Finance are likely candidates for Largecap reclassification. 

In a research note containing a preliminary list of stocks likely to be re-categorised, Pagaria said that the official list of AMFI will serve as a reference for active domestic fund managers. He also anticipates an increase in the market capitalisation of certain categories. 

 

                            

                          Pagaria anticipates that the Midcap segment will welcome four newly listed companies: Waaree Energies, Premier Energies, Ola Electric Mobility, and Brainbees Solutions (FirstCry). 

 

                                                   The Smallcap category is anticipated to expand significantly, with as many as 27 newly listed stocks potentially joining the group. Notable names include Emcure Pharmaceuticals, KRN Heat Exchangers, Northern Arc, Gala Precision Engineering, Unicommerce Esolutions, Akums Drugs and Pharma, Ceigall India, Baazar Style, ECOS Mobility, and Manba Finance, among others. 

                   

                       It is important to note that re-categorisation does not necessarily drive fresh inflows or outflows. However, stocks reclassified to a higher category may experience some uplift, though not necessarily immediate changes in fund flows, Pagaria explained. When stocks move up from smaller to larger categories (for example, from small-cap to mid-cap or from mid-cap to large-cap), their visibility increases. 

 

As per the circular released by market regulator Security Exchange Board of India (Sebi) in October 2017, the listed stocks must be strictly categorised into baskets with a well-defined classification of large cap, midcap and small cap stocks. This was to ensure uniformity in respect of the investment universe for equity mutual fund schemes.