FTSE has increased the weights of HDFC AMC, Shriram Finance and Timken India in its indices, following large block deals in the stocks. This will lead to a cumulative inflow of $44 million into these scrips, according to Nuvama Alternative & Quantitative Research.
After the stake sales by promoters and strategic investors, the chunks have been added to free float market capitalization, which has resulted in weight increase.
Shriram Finance is expected to see inflows to the tune of $19 million, HDFC AMC of $16 million and Timken India of $9 million. This will happen as passive funds tracking FTSE indices will rebalance portfolio on June 23, added Nuvama Alternative & Quantitative Research.
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The development comes after Piramal Enterprises and TPG together offloaded 11 percent stake in Shriram Finance. On the other hand, abrdn sold over 10 percent stake in HDFC AMC and Timken Singapore sold 11 percent stake of Timken India.
"Sale of stakes held by Piramal and TPG removes key overhang on valuation. Thus, we upgrade stock to buy and raise target to Rs 2,130 from Rs 1,445 per share," said foreign broking firm Jefferies in a recent note.
The NBFC should deliver 16 percent EPS (earnings per share) CAGR and 15 percent return on equity in FY24-26, it added.
Despite the 23 percent rally in one week, Kotak Institutional Equities believes valuations still remain inexpensive for Shriram Finance at 10X and 8X estimated earnings, for FY24 and FY25.
For HDFC AMC, all eyes are on whether the stock can move above Rs 2,220 levels before the cut-off date in July to make a re-entry in MSCI Standard Index. The stock had been removed from MSCI index in May 2022.
At 11:40 am, HDFC AMC was trading 1 percent lower at Rs 2,015.30 while Shriram Finance was 1.9 percent lower at Rs 1,701.
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