Promoters are usually major shareholders in their companies and back up their faith in the business by increasing stake in them. For investors, this is a further affirmation of the company's growth prospects.
According to SEBI norms, a promoter can buy up to 5 percent equity in his company in any particular year from the stock market through the creeping acquisition route. He can increase his stake up to a maximum of 75 percent. However, if the company does make an acquisition or opts for a fresh preferential issue then promoters' holding can go over and above the prescribed 5 percent limit.
Moneycontrol analysed BSE-listed companies over a three-year period in which promoters doubled their holdings. As a filter, we selected companies with a market cap of over Rs 1oo crore.
While 19 companies witnessed a doubling of promoter stake, 6 stocks doubled their returns in the last three years. Stocks include Moschip Semiconductor, Alankit, Fortune Financial Services, Ram Minerals, Monarch Networth and Tide Water Oil.
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