Promoters pledged shareholding increases to 1.6%, pledged value reaches Rs 1.97 lakh crore

Promoters of top Indian companies increased their share pledges in the quarter ended December as volatility hit the equity markets on expectations of global policy tightening amid higher inflation and rising Omicron cases.

The level of shares pledged in BSE 500 Index companies increased to 1.6 percent of promoter holdings in the December quarter from 1.5 percent in the previous quarter, according to a study by Kotak Institutional Equities. The promoters of 78 companies in the BSE 500 pledged part of their holdings in the December quarter, the report added.

The value of shares pledged by promoters was Rs 1.97 lakh crore, which was about 0.81 percent of the BSE 500 Index’s market capitalisation.

The promoters of Thyrocare Technologies were the biggest pledgers, with 92.9 percent of their holdings committed at the end of December. The value of their pledged holdings is estimated to be Rs 3,870 crore.

The second most-pledged shares were by the promoters of Suzlon Energy at 88.5 percent, followed by Max Financial Services (63.6 percent) and Kalpataru Power Transmission (50 percent). The pledged holdings of the Suzlon, Max Financial and Kalpataru Power promoters were estimated at Rs 1,300 crore, Rs 3,170 crore and Rs 1,440 crore, respectively.

The promoters of Max Healthcare, Solara Active Pharma Science, Strides Pharma Science, Lemon Tree Hotel and Max Financial Services, among others, increased their pledged holdings the most during the quarter.

Pledged promoter holdings in HFCL, Delta Corp and Emami declined the most. Fresh promoter pledges included those of Max Healthcare, IIFL Wealth, Bajaj Electricals and Gujarat Fluorochemicals.

Pledges in Adani Group companies continued to decrease. Pledged shares in Adani Enterprises fell to 4.1 percent from 4.5 percent in the previous quarter. Adani Green Energy’s pledged shares declined to 1 percent during the quarter from 1.1 percent a quarter ago. Adani Transmission promoters’ pledged holdings were down for the seventh consecutive quarter to 7.2 percent from 53.6 percent in the March 2020 quarter.

The pledged shares of JSW Energy dropped for the seventh consecutive quarter, while those of Asian Paints fell for the fifth consecutive quarter.

Kotak Institutional Equities clarified that the 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,” Kotak said