Pledged promoter holdings declined to 2.47 per cent in June quarter: Kotak Equities

K.S. Badri Narayanan Chennai | Updated on August 14, 2019

The percentage of pledged promoter (majority shareholder) holdings by value has come down in the June 2019 quarter in comparison to the March quarter, reveals an analysis by Kotak Institutional Equities.

The percentage of pledged promoter holdings declined to 2.47 per cent in the June quarter from 2.83 per cent in the March quarter, the study on BSE-500 stocks by Kotak said.

The outstanding promoters' pledged shares were Rs 1.73 lakh crore, which is about 1.21 per cent of the total BSE-500 Index’s market capitalisation at end-June 2019. The corresponding figures at the end of the March quarter were Rs 1.95 lakh crore and 1.38 per cent respectively.

On the BSE-500 Index, promoters of 112 companies pledged their holdings, which is down from 116 in March; and the number of companies where promoters pledged more than 90 per cent of their holding, too, reduced to four in June quarter as against six in the previous quarter.

Companies such as CG Power and Industrial, Sterlite Technologies, Indiabulls Real Estate, Himatsingka Seide and India Cements have reduced their pledged shares.

Companies in which promoters revoked/ creditors invoked the entire pledged holdings included CG Power, Sterlite Tech, IB Real Estate, Himatsingka, IB Housing Finance and Advanced Enzyme, Kotak said.

However, Eveready Industries, Lemon Tree Hotel, Orient Electric, Chambal Fertilisers and Jindal Steel and Power saw the highest increase in pledging, while the promoters of Lemon Tree Hotel, Orient Electric, Teamlease Services and GHCL have pledged afresh.

Among the Nifty-50 companies, Zee Entertainment (64 per cent), JSW Steel (49.1 per cent), Adani Ports & SEZ (32.1 per cent), IndusInd Bank (26.3 per cent), Asian Paints (12 per cent), and Sun Pharmaceutical (11 per cent) saw the promoter pledging rising.

Kotak clarified that pledging of shares does not necessarily imply that a company or a promoter is under financial stress; banks (lenders) could have sought additional security in the form of promoter shares, it added.

According to the report, pledging by the promoters of Reliance Infrastructure, Reliance Capital and Gayatri Projects stood at more than 95 per cent of their holdings.

Published on August 14, 2019

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