Making most of the market rally, the promoters of BSE-500 companies have reduced the percentage of their pledged shares for the first time in 7 quarters. As on September quarter, the percentage of promoters’ shares pledged within BSE-500 universe stood at 11.76%, from 12.01% in June quarter, as per Capitaline data.
Experts attribute this trend-reversal to the surge in the markets. “The rally has shored up the value of the company’s shares. Subsequently, the drawing power of the promoters’ shares has gone up. The promoters are asking lenders to either raise their borrowing limits to match rise in the value of the shares or allow their shares to be released,” said SP Tulsian, an independent analyst. However, shares pledged with banks as collateral for working capital are unlikely to be released, he added.
The BSE Sensex has gained 31.67%, while the CNX Nifty has gained 32.36% YTD Infrastructure companies have been the major beneficiaries. From 96% in June quarter, HDIL’s promoters released all their pledged shares in September quarter. YTD, the stock has gained 63.12%.
The logistics player Gateway Distriparks has seen its pledged shares fall to 25.83% in September quarter from 49.43% in June quarter. The stock has gained 120.41% YTD.
For construction company NCC, the percentage of promoters’ pledged shares have dropped by 19 percentage points in September quarter. YTD, shares are up 179.11%.
Additionally, Aban Offshore’s shares have gained 66.39% in YTD, while the percentage of promoters’ pledged shares have fallen by 11 percentage points in September quarter. Indiabulls Power’s promoters had 100% of their shares pledged as on June quarter. However, that ratio has fallen to 81% with shares gaining 51.22% in YTD.
However, experts don’t see the fall in percentage of pledged shares as a reliable indicator of balance sheet improvement. “The improvement in gearing will depend upon the borrowing programme of individual companies. If borrowings are large, then further fall in the percentage of pledged shares is unlikely,” said Deven Choksey, MD of KR Choksey Securities.