Shares of Tata Consumer Products Ltd. jumped to a record high as at least two brokerages expect the maker of tea and salt to replace Gail (India) Ltd. in the benchmark Nifty 50 in the upcoming semi-annual reshuffle.
“GAIL currently has an estimated weight of 40 basis points in the index, while Tata Consumer is expected to enter the index with a weight of 60 basis points, entailing ETFs and index funds buying worth Rs 760 crore,” ICICI Securities said in a strategy note. On the likely prospects of being removed from the index, the brokerage expects GAIL to see selling worth Rs 510 crore.
According to Edelweiss Alternate Research, the index changes may be announced by the second half of this month and take effect on March 26. It sees buying worth $88.7 million in Tata Consumer Products with a likely weight of 0.59%, while the exit of the state-run gas distributor may result in selling worth $56.7 million.
Tata Consumer is currently part of the Nifty Junior or the Nifty Next 50 Index. To be included in the Nifty 50, the stock should be a part of the futures and options segment. The Nifty 50 is reconstituted twice every year in March and September.
Earlier this month, the consumer products division of the Tata Group reported a 23% year-on-year rise in revenue, led by volume and value growth (volume plus price-led expansion) in the packaged beverage business. Its net profit increased by 25%. The company has also agreed to buy 100% of the total equity in ready-to-eat food products maker Kottaram Agro Foods — the promoter of the ‘Soulfull' brand — for Rs 155.8 crore.
Shares of Tata Consumer are trading as much as 1.9% higher as of 9:30 a.m. on Tuesday at a record high of Rs 634.9 apiece. The stock is also among the top performers on the Nifty Next 50. Of the 15 analysts tracking Tata Consumer, 13 have a ‘buy' rating, while two suggest a ‘sell', according to Bloomberg data. The stock crossed its 12-month consensus price target of Rs 628.46 on Tuesday.
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