Stocks

Despite market fall, pledging of shares by promoters up only marginally year-on-year

Our Bureau Mumbai | Updated on January 20, 2018 Published on April 07, 2016

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Invocation fears keep investors away from cos with large ratio of pledged shares

The percentage of promoter holding pledged (in companies which have at least some pledging) went up from 44.99 per cent a year back to 45.98 per cent on March 31, 2016, according to Prime Database.

As on March 31, shares were pledged in as many as 505 of the 1,514 NSE-listed companies (around 33 per cent). In the previous year, 492 companies’ shares (out of 1,445 NSE-listed) were pledged.

High pledge levels are typically not considered a good sign by investors as a downturn in the market price can lead to invocation of pledge and change in management.

Pledge on shares of promoters of as many as 40 companies were invoked in the last one year with the largest being Unitech (₹350 crore).

However, promoter share pledging in value terms decreased 1.66 per cent on a y-o-y basis to ₹1.78 lakh crore as on March 31The top 5 companies by value of pledged shares are: TCS, Cairn India, Adani Ports and Special Economic Zone, JSW Steel and Asian Paints.

Overall, there were 217 companies in which the percentage of promoter holding pledged increased while in 180 firms it decreased. In all, creation of pledges took place in shares of 244 companies (of promoters) during the year, while release of pledges took place in the shares of 191 companies (of promoters).

The top five pledgees were Kotak Mahindra Group, Axis Group, YES Bank, LIC and STCI Finance.

Published on April 07, 2016
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