Promoters' pledged shares average soars to 7-yr high

The average percentage of shares pledged by promoters of NSE-listed companies hit a 7-year high, with a valuation of Rs 1.98 lakh crore, for the quarter ended June this year.

The average percentage of holdings pledged increased to 16 per cent at the end of June, from 15 per cent a year earlier, according to a report by Prime Database.

It stood at 7.38 per cent with a valuation of Rs 1.08 lakh crore at the end of June quarter 2009.

The value of shares pledged by promoters of NSE-listed companies rose to Rs 1.98 lakh crore as on June 30, 2016 as against Rs 1.77 lakh crore a year ago. The valuation stood at Rs 2.08 lakh crore as of August 11.

"Pledging of shares by promoters in NSE-listed companies was at a 7-year high as on June 30, 2016," Prime Database MD Pranav Haldea said.

The increase in valuation can be be attributed to the rise in share prices, he added.

As on June 30, 2016, pledging of shares was seen in as many as 509 NSE-listed companies out of the total 1,517. In comparison, it was 496 companies in the year-ago period.

"The high pledge levels are typically not considered a good sign by the investors as a downturn in the market price can lead to invocation and change in management," Haldea said.

Tata Consultancy Services (TCS) topped the list of firms, with the highest pledging in value terms. The promoters have pledged shares worth Rs 10,708 crore, or 2.9 per cent of their total holding. This is followed by Adani Ports & Special Economic Zone (Rs 9,514 crore; 39.18 per cent, Cairn India (Rs 9,072 crore; 57.49 per cent) As on June quarter, there were as many as 31 companies in which the complete holding, that is 100 per cent, of the promoters was under pledge.

Besides, there were as many as 79 companies in which more than 90 per cent of the promoter shareholding was pledged and 212 in which more than 50 per cent of the promoter's holding was pledged.