Pledged promoter holdings declined in the quarter ended March at a time troubles of Essel Group and Anil Ambani group brought such borrowing against shares in the spotlight.
Stake pledged by promoters fell to 2.83 percent by value as of March from 2.98 percent in December, according a report by Kotak Institutional Equities. Promoters of 116 of the BSE 500 companies have pledged their holdings, the report said, adding that controlling shareholders of six companies have pledged more than 90 percent of their holdings.
Promoters pledge their shares to secure loans to meet working capital requirements, fund other ventures or make acquisitions. Shareholding in a company is often used as collateral. The pledging, however, doesn't necessarily mean distressed financial state of a company or promoters. But Essel Group and Ambani companies have been struggling to repay debt, and lenders have agreed not to sell shares offered as collateral for now.
Key Highlights:
- Companies whose promoters pledged over 95 percent of their holdings included CG Power & Industrial Solutions Ltd., Reliance Infrastructure Ltd., Reliance Capital Ltd. and Sterlite Technologies Ltd.
- Companies with the highest increase in pledged promoter holdings comprised JK Tyre & Industries Ltd., Reliance Capital, Reliance Infrastructure, Dish TV India Ltd. and VA Tech Wabag Ltd.
- Companies in which pledged promoter holdings declined in the three-month period were Granules India Ltd., Strides Pharma, Reliance Communications, Coffee Day Enterprises and Bajaj Consumer Care.
- Fresh promoter pledges happed in JK Tyre & Industries, VA Tech Wabag, Forbes & Company Ltd. and SH Kelkar and Co. Ltd.
No company in the BSE 500 Index had promoters that revoked their entire pledged holdings, the report said.
Pledged Promoter Holdings In Nifty 50
- Companies with more than 5 percent of pledged promoter holdings included Adani Ports & Special Economic Zone Ltd., Asian Paints Ltd., Indiabulls Housing Finance Ltd., JSW Steel Ltd., Sun Pharmaceutical Industries Ltd. and Zee Entertainment Enterprises Ltd.
Pledged Promoter Holding In BSE 200
Axis Capital, in a separate report, said aggregate stake pledged by promoters of BSE 200 companies fell to 12.9 percent in the March quarter from 13.3 percent in the previous three months. Pledged promoter holding had touched an eight-year high in the October-December quarter of financial year 2017-18, the report said.
Company-wise, however, the analysis showed that “of the 41 firms that have pledged their shares, more than 50 percent saw an increase in pledging, while 20 percent saw a decline.”
Within these, Reliance Capital saw the biggest increase in pledged shares — 97 percent of promoters pledged holding in March quarter compared to 75 percent in the October-December period. Jubilant Food saw the sharpest decline by 5 percent.
IndusInd Bank was left out of this list as it revoked its entire pledged shares during the quarter.
(Corrects an earlier version that misstated that decline in pledged promoter holdings)
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