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The upcoming semi-annual Nifty50 reshuffle could result in Info Edge being the closest contender to replace Indian Oil Corporation on September 29, according to ICICI Securities. However, it believes that Info Edge is marginally behind in terms of average free-float market capitalisation criteria while fulfilling other conditions such as inclusion in the F&O list and being part of the upcoming proforma NSE100 universe amongst others.
Over 100x P/E
ICICI Securities in a note said that Info Edge will be the first pure-play internet platform company to be included in the Nifty50 index as and when it qualifies. To put things into perspective the US Dow Jones Industrial Average still doesn’t have any of the internet platform companies such as Amazon or Google as part of its constituents given the limitations of it being a price-weighted index.
In the upcoming proforma NSE100 universe list, which will be based on the average free-float market cap since February 2021 till now, two other non-Nifty50 index stocks that rank ahead of Info Edge are Avenue Supermarts and Adani Green Energy.
“Given that both the stocks are not part of the F&O list currently, they are excluded from our likely list although Avenue Supermarts has the edge in terms of qualifying as an F&O stock. All the three stocks are notably from the new-age economy sectors of internet businesses, organised discount grocery retail with e-commerce incubation, and a green energy company, respectively. Also, all these three companies have a 1-year forward P/E ratio of over 100x, thereby inflating the NSE 100 P/E ratio as compared to the Nifty50,” ICICI Securities said in a report.
Take on Zomato
It further added that the new large-cap internet platform companies like Zomato with high free-float market cap due to zero promoter holdings could be serious contenders for entry into the benchmark indices going ahead. Shares of the online food aggregator climbed nearly 53% in its debut trade against its issue price of Rs 76. Thereafter, it hit a high of Rs 138, up 81.57% over the issue price.