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Adani Enterprises hits new high, Shree Cement sheds over 2 percent. Here's why

03 Sep , 2022   By : Kanchan Joshi


Adani Enterprises hits new high, Shree Cement sheds over 2 percent. Here's why

Adani Enterprises clocked a new all-time high on Friday, after being added to the Nifty 50 index. The Index Maintenance Sub-Committee (Equity) of NSE Indices decided to make the replacement of stocks in various indices with effect from September 30, 2022. On the other hand, Shree Cement shares tumbled after being replaced by Adani in the 50-scrip index.


On NSE, Adani Enterprises shares settled at ?3,352 apiece up by ?118.75 or 3.67%. The shares have clocked a new all-time high of ?3,369.40 apiece.


Meanwhile, Shree Cement shares closed at ?21,100 apiece lower by ?486.15 or 2.25%.


With effect from September 30, Adani Group's flagship company, Adani Enterprises will be listed under the Nifty 50 index which is the main benchmark of NSE. The company has replaced Shree Cements, one of the biggest cement makers in Northern India.


Notably, while entering Nifty 50, Adani Enterprises will no longer be listed under Nifty Next 50. However, Shree Cement will be part Next 50 list.


This replacement will be applied to the Nifty50 Equal Weight index.


A diversified 50 stock index, the Nifty 50 accounts for 13 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index-based derivatives, and index funds.


Meanwhile, Nifty Next 50 represents 50 companies from NIFTY 100 after excluding the NIFTY 50 companies.


Last month, ICICI Securities in its report, predicted Adani Enterprises to replace Shree Cement in the Nifty 50 index.


Citing the reason, the report said, "the changes will take into account the average free float (FF) market capitalisation for the period Feb’22-Jul’22. While three stocks have qualified on free float market cap criteria, Adani Enterprises edges out in terms of being in the F&O list and is the most likely candidate to replace Shree Cement."


"This change will result in buying worth Rs17.6 billion (5x ADTO) for Adani Enterprises and selling worth Rs6.3 billion (6x ADTO) for Shree Cement from NIFTY50 ETF funds," the report added.


In Q1FY23, Adani Enterprises posted a consolidated net profit of ?469.46 crore compared to ?271.46 crore in the same quarter last year - registering a growth of 72.94%. Consolidated revenue from operations came in at ?40,844.25 crore in Q1FY23 - rising by 3.25 folds or 224.71% from ?12,578.77 crore in Q1FY22.


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