LG Electronics India, Tata Capital face long wait for global index entry

markets

The two marquee IPOs of 2025 — LG Electronics India and Tata Capital Ltd — have drawn contrasting receptions on Dalal Street. While LG Electronics India made a spirited debut, igniting investor enthusiasm, Tata Capital’s muted listing tempered the market mood. Yet, despite the buzz, both stocks are unlikely to find a quick berth in global or major domestic indices, analysts said.

Tata Capital gained 1.6 percent on its listing day, while LG Electronics India surged over 50 percent above its issue price.

Following their listings, promoters continue to hold about 85 percent in each company, leaving a low public float — a key hurdle for index inclusion. “The limited free float restricts eligibility for major global benchmarks,” said market experts.

For LG Electronics India, index providers are expected to consider a float of about 10 percent at listing, rising gradually to 13 percent after a month and 15 percent within three months. Analysts said these levels are insufficient to trigger meaningful passive inflows.

For Tata Capital, the free float is estimated at 3.91 percent at IPO, increasing to 11.2 percent after the anchor lock-up ends and 12.1 percent once pre-IPO investor restrictions lapse. Experts noted the stock would remain on the sidelines until the free float exceeds 15 percent and the market capitalisation crosses the inclusion threshold.

“Regular rebalances that could add LG Electronics India and Tata Capital to global indices will likely begin only by June 2026,” analysts said. “Given the low float, any passive inflows will be modest unless promoters pare stakes or the stocks rally sharply.”

On the domestic front, neither company is expected to enter the Sensex or Nifty anytime soon, as inclusion requires the stock to be part of the derivatives segment. However, they could qualify for indices such as the Nifty Next 50 or Nifty MidCap 150, though passive buying from these baskets will likely remain limited.

According to analysts, LG Electronics India is poised to be classified as mid-cap, while Tata Capital is likely to fall under the large-cap category in the AMFI classification for January 2026, potentially drawing interest from active fund managers. “Selective accumulation from active managers is expected once the reclassification takes effect,” said Brian Freitas, analyst at Smartkarma.

Brokerage interest has been robust. Since LG Electronics India’s debut, ten major brokerages — including Prabhudas Lilladher, ICICI Securities, Nomura, Emkay, Antique Stock Broking, Asian Markets Securities, Motilal Oswal, Ambit Capital, and Equirus Securities — have initiated coverage. In contrast, only two brokerages have begun coverage on Tata Capital.

Most analysts have issued buy recommendations, citing strong growth prospects, brand strength, and improving profitability. For LG Electronics India, the average 12-month target price stands at Rs 1,815 per share, compared with its previous-day close of Rs 1,669. For Tata Capital, the average target is Rs 360 per share, against the current market price of Rs 330.

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