Coimbatore, June 14 As the shares of MMTC are locked in lower circuit for the second day running, losing Rs 18.90 to remain frozen at Rs 170.15 on the NSE, a look at the pre-OFS shareholding pattern shows that mutual funds and individual investors will have to bear a major portion of the loss if they choose to exit from the counter now.

What is surprising is that while the Domestic Institutional Investors (DIIs) have lightened their holdings in the stock during the last quarter of 2012-13, others including retail investors, have rushed to fill the vacuum that has turned out to be a bad call.

Equity base

MMTC has an equity base of Rs 100 crore, of which 99.33 per cent was with the Central Government before the OFS yesterday. While the FIIs had stayed away from the stock barring a token holding, the retail investors have increased their holding during Q4 of last fiscal, a strategy which appears to have backfired with the Government offering the shares to the public at a 72 per cent discount to the market price, setting off the selling spree in the counter since Thursday.

According to the data available with the BSE, the DIIs, whose stake in the company’s equity was 0.5 per cent during the September and December ending quarters of 2012-13, cut back their holding to 0.31 per cent in the March 2013 quarter.

But others, including individual investors, nearly doubled their holding in the stock during Q4 of 2012-13 from 0.17 per cent in Q2 and Q3 of last year to 0.36 per cent in the quarter ended March 31, 2013.

Shareholding pattern

Shareholding data shows that as at the end of March 31, 2013, the GoI held 99.33 crore shares (face value Re 1) in MMTC constituting 99.33 per cent.

Institutional holding in the stock was concentrated in the hands of two DIIs (Mutual Funds/ UTI) but their identity is not known. The two DIIs together held 30.92 lakh shares in MMTC.

Apart from them, five Financial Institutions/banks held a marginal stake of 32,128 shares in the company. Two FIIs held a token shareholding of 201 shares, taking the total institutional shareholding to 31,24,455 shares or 0.31 per cent of the equity.

Non-institutional category

In the non-institutional category, 1,185 corporate bodies had a total holding of 10,42,311 shares forming 0.10 per cent of the pre-OFS equity. But it was the holding of individuals which was substantial.

As at the end of March, 47,624 individual shareholders together held 24,72,938 shares in MMTC, constituting 0.25 per cent of the equity. That none of them held shares in excess of Rs 1 lakh in value shows that most of them would be small investors.

There were also 440 Non-Resident Individuals who held 48,229 shares. The non-institutional shareholding was 35.63 lakh shares constituting 0.36 per cent of the equity and the total public shareholding was 66,88,000 shares forming 0.67 per cent of the equity.

Public shareholding

It is now this public shareholding which is coming to the market. While it might not be possible till the quarterly data is available for the quarter ending June to know who — institutions or individual investors — are rushing to exit from the company, it might be a while before the market absorbs the selling for the stock price to stabilise. But as the OFS price of Rs 60 is still quite a distance away from the locked-in price of Rs 170 today, the selling pressure might continue for a while in MMTC, particularly if the overall market remains weak.

(This article was published on June 14, 2013)
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