Edelweiss noted that the promoter pledge has crossed 90% in several companies including ABG Shipyard (95.1%), Essar Ports (99.7%), Jaypee Infratech (93.3%)
The value of share pledging by listed Indian companies rose to R1.94 lakh crore for the first quarter of FY16 from R1.74 lakh crore in the previous quarter.
Amongst the notable companies where promoters have pledged their shares during the current quarter are Adani Ports, Reliance Power, Adani Enterprises, JSW Steel and Jindal Steel & Power. It also noted that the promoter pledge has crossed 90% in several companies including ABG Shipyard (95.1%), Essar Ports (99.7%), Jaypee Infratech (93.3%).
An analysis on share pledge by Edelweiss Securities observed incremental pledging activity during the April-June period that led to an increase in the value of pledged shares. In addition, market movement was flat-to-negative and key domestic and global events kept markets on “tenterhooks”, stated Edelweiss in its note.
“The increase in value of pledge holdings can be attributed to incremental pledging activity… With rate softening regime not yet in sight, companies will continue tapping the pledging avenue as a source of funds,” said Edelweiss analysts Yogesh Radke and Sriram Velayudhan.
The report also said that Reliance Infrastructure and Reliance Power saw incremental pledging by promoters. It also said the pledging increased in IL&FS Transport Networks and Adlabs Entertainment in the derivatives segment.
In terms of value, industrials (R426 billion) hold the highest number of pledged shares followed by consumer discretionary (R330 billion) and metals (R227 billion). The financial services group said the promoters pledge has been come down in companies like Dish TV, Cairn India, Sun TV Network and Jain Irrigation during the quarter.