Pledging of shares by promoters in NSE-listed companies have hit a 7-year high. The value of shares pledged by promoters rose 11.3 per cent to Rs 1.98 lakh crore as on June 30, 2016 compared to Rs 1.77 lakh crore a year ago. The valuation stood at Rs 2.08 lakh crore as on August 11. The percentage of promoter holding pledged went up from 15.57 per cent a year back to 16 per cent on 30th June 2016 and further up to 16.21 per cent as on August 11.
According to PRIME Database, shares were pledged in as many as 509 of the 1517 NSE-listed companies up 2.6 per cent from 496 companies a year back. This has further increased to 522 companies on August 11.
Rise in or high pledging of shares is not considered as a good sign for investors as correction in the market price can lead to invocation and change in management, said Pranav Haldea, Managing Director of PRIME Database. There were as many as 31 companies in which the complete holding of the promoters was under pledge as on 30th June 2016.
Top five companies by value of pledged shares are Tata Consultancy Services, Adani Ports and Special Economic Zone,Cairn india, Zee Entertainment Enterprises and JSW Steel.
The largest pledge creation transaction of the period (July 1, 2015 to June 30, 2016) was that of Tata Sons Ltd., promoter of Tata Consultancy Services, pledging 1.70 crore shares on January 22, 2016 to LIC. The value of the pledged shares being Rs. 3,902 crore. n terms of the pledgee, maximum amount of shares were pledged to Kotak Group followed by LIC in the last 1 year.
Shares of promoters of as many as 45 companies were invoked in the last 1 year. The company in which the maximum value of shares were invoked during last 1 year was United Breweries (Rs. 442 crore).