Al Rajhi Takaful strong contender for MSCI upgrade: Al Rajhi Capital

Logo of Al Rajhi Co. for Cooperative Insurance (Al Rajhi Takaful) 

Al Rajhi Company for Cooperative Insurance (Al Rajhi Takaful) is a strong contender for an upgrade from MSCI Saudi Arabia Small Cap Index to MSCI Saudi Arabia Standard Index, Al Rajhi Capital said.

“On the other hand, there is no probable exclusion candidate in the upcoming periodic review,” the brokerage added.

In its report, Al Rajhi Capital explained that Al Rajhi Takaful's market capitalization of SAR 21.1 billion (as of July 18, 2024) is reasonably above the reference point of SAR 11.5 billion and exceeds the upper limit of SAR 17.2 billion.

The report also stated that the free-float market capitalization is SAR 7.8 billion, thereby meeting the estimated free-float threshold for inclusion in the MSCI Index, which is SAR 5.8 billion.

The brokerage pointed out that Al Rajhi Takaful has a strong chance of being upgraded from the Small Cap Index.

“On the other hand, the market capitalization for Astra Industrial Group of SAR 12.9 billion also exceeds the reference point but it fails to breach the upper threshold,” Al Rajhi Capital reported.

Therefore, the brokerage excluded the possibility of Astra being upgraded to the Standard Index during the current review.

“However, since all other criteria are adequately satisfied by Astra, there is some probability for upgradation in the next review given that the stock rallies between 25-30%,” the brokerage highlighted.

The brokerage expects Al Rajhi Takaful to witness inflows to the tune of USD 114 million, or SAR 427.5 million, based on the average trading value over the last three months and 20 days. This implies approximately five days to cover the anticipated inflows for Al Rajhi Takaful.