The fourth quarter disclosures related to the shareholding pattern reveal that about 130 companies saw a decrease in their promoter shareholdings, while 57 companies saw an increase. Further, the bulk of the decrease was seen in the case of small-caps and mid-caps.
A data analysis by Moneycontrol showed that companies like Gensol Engineering Ltd, Sundrop Brands Ltd, AWL Agri Business Ltd., JB Chemicals & Pharmaceuticals Ltd., Azad Engineering Ltd., UCO Bank, Punjab & Sind Bank, Central Bank of India, Hitachi Energy India Ltd., and Aditya Birla Fashion and Retail featured among the list of companies with maximum fall in promoter holding in the fourth quarter period.
On an overall basis, 615 companies have disclosed the latest shareholding details. While 129 companies saw a decrease in the promoter stake, 57 reported an increase. The average decrease among the 129 companies was 2.6%, while the average increase among the 57 companies was a marginal 0.4%.
Within the mid-cap universe, 167 companies have reported their latest shareholding pattern with 26 seeing a decrease and seven, an increase. The largest decrease was in AWL Agri Business Ltd. followed by PSU banks like UCO Bank, Punjab & Sind Bank and Central Bank of India. Aditya Birla Fashion and Retail Ltd. also saw a notable drop.
In the small-cap space, shareholding details of around 450 are available and 103 of those saw a decrease with 50 reporting an increase. The largest increase was in India Cements, driven by UltraTech Cement’s acquisition. Religare and Embassy Developments also saw an increase.
“Promoter stake increases typically stem from open market purchases, warrant subscriptions, or strategic mergers/restructuring signaling confidence. Decreases occur via open market sales, dilution from QIPs/preferential allotments to other stakeholders, or restructuring,” said market veteran Deepak Jasani.
Explaining the trend wherein small-caps saw the highest reductions, followed by mid-caps, Jasani said that it is a reflection of the different fundraise needs and market dynamics.
“Small-caps, hit hardest by a market bloodbath after stretched valuations, saw promoters encash profits or dilute stakes to manage debt or fund expansion. Their sharper stock price fall and limited fundraising options amplified these decreases,” he explained.
He added that small-caps operating on smaller operational scale and tighter financial cycles, faced greater funding pressures. Meanwhile, mid-caps, with relatively larger sizes and better financial flexibility, saw fewer decreases.
In a similar context, Akshay Chinchalkar, Head of Technical and Fundamental Research at Axis Securities, said, “While a decrease in promoter stake can sometimes be perceived negatively by investors, it is not always a bad sign”.
“The need to diversify their holdings, raise money for personal reasons, regulatory requirements or a solid performance by the stock can also be reasons for promoters to reduce their stakes. Each instance of stake selling may be looked at on its own merit.”
The recent promoter stake reducing in PSU banks are less about loss of confidence and more about ticking regulatory and strategic boxes, said Trivesh D, COO, Tradejini.
The government’s reducing its holding in banks like UCO Bank and Central Bank of India to meet SEBI’s 25% minimum public shareholding norm and raise capital without full-scale privatization. "It is well-timed move financials have improved, markets are supportive, and the dilution is helping strengthen balance sheets," he opined.
The volatility across small-caps were mostly reductions due to vulnerability to capital shifts. "AWL’s case is different. It is about restructuring. The Adani Group’s exit from the JV led to a sharp 13.5% drop in promoter holding, but that’s more operational than confidence-driven," explained Trivesh. "So, while some of these changes look steep on paper, they’re largely strategic, not signs of promoters walking away," he added.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions
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