Moneycontrol News
Total value of pledged holdings by promoters fell to Rs 2.12 lakh crore in the second quarter ended September 2018, as compared to Rs 2.38 lakh crore during the June quarter, according to a report by Edelweiss Securities.
At the end of the September quarter, around 697 companies reported pledged holdings out of 4,048 companies that disclosed shareholding as of October 24, 2018.
Pledging of shares by promoters is not an unusual activity and is often done by companies when there is some need for loans. The promoter’s shares are offered as collateral to banks in exchange for loans.
“In a rising interest rate scenario, promoters often use shares owned by them as collateral for loans. If the majority owner in your company has pledged a sizeable chunk of his or her equity, it could trigger a volatile price movement in a falling market,” explained Kotak Securities on its portal.
Names such as Reliance Capital, Centrum Capital, Adani Ports, and Just Dial have seen a consistent incremental pledging activity in the past five quarters, analysts at the firm wrote in their report.
Meanwhile, Future Enterprises, Bajaj Corp, Fortis Healthcare and Sterlite Technologies have seen a sharp jump in promoter pledging activity as compared to the previous quarter.
Market cap of Rs 500 crore and above
Edelweiss Securities said that 82 companies with market cap of over Rs 500 crore have seen an increase in promoter pledging over the previous quarter, which had 85 names in this list. Around 72 companies have seen reduction in promoter pledged shares, against 74 in the previous quarter.
“Prominent names that saw increase in promoter pledging were Zee Entertainment, Dish TV and Reliance Infrastructure. Partial revoke was seen in DB Corp, KPIT Tech and Parag Milk Foods,” analysts at the firm wrote in the report.
Meanwhile, complete revoke was seen in Eveready Industries and Jubilant Life Sciences.
Companies with promoter pledge holdings above 90%
The brokerage house said that companies with high promoter pledge holdings were Bajaj Hindusthan (100%), Reliance Naval Eng (100%), CG Power & Industrial (100%), IL&FS Transport (98.23%) and Sterlite Technologies (96.68%).
Prominent names wherein promoters revoked pledge partially were Apollo Tyres, Strides Pharma, JSW Steel and India Cements.
Among midcaps incremental promoter pledging was seen in Dish TV and Satin Creditcare.
F&O universe
Around 51 companies reported promoter pledge holdings in this segment.
Between the September and June quarter, 24 companies saw incremental pledging activity. Zee Entertainment (59.27% versus 52.08%), Jubilant Foods (14.02% versus 10.42%), Adani Ports (47.81% versus 38.3%) and NCC (38.13% versus 32.46%) are some prominent names.
Partial revoke was seen in 21 companies with key names being India Cements (35.97% versus 43.65%), KPIT Tech (32.36% versus 41.72%) and Strides Pharma (19.63% versus 23.54%).
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
