The percentage of pledged promoter holdings (by value) declined to 2.47% in the June 2019 quarter compared to 2.83% in the March 2019 quarter, according to Kotak Institutional Equities. Outstanding promoters’ pledged shares were Rs 1.73 lakh crore at the end of the June quarter, which is about 1.21% of the total BSE-500 Index’s market capitalisation at end-June, shows the report from Kotak Institutional Equities.
The highest increase in pledged promoter holdings includes names like Eveready Industries, Lemon Tree Hotel, Orient Electric, Chambal Fertilisers and Jindal Steel & Power. While companies in which pledged promoter holdings declined are CG Power and Industrial, Sterlite Technologies, Indiabulls Real Estate, Himatsingka Seide and India Cements.
Companies in the Nifty-50 with over 5% of pledged promoter holdings were Adani Ports & SEZ (32.1%), Asian Paints (12%), IndusInd Bank (26.3%), JSW Steel (49.1%), Sun Pharmaceutical (11%) and Zee Entertainment (64%), says the report.
Promoters of 112 firms of the BSE-500 index have pledged their holdings. Four firms had more than 90% of their promoter holdings pledged. “We clarify that 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,” the Kotak report explained. Firms whose promoters pledged over 95% of their holdings are Reliance Infrastructure, Gayatri Projects and Reliance Capital. There are around 30 companies in June quarter where promoters have pledged more than 40% of their holding. In the last one year the stocks in which the promoters have pledged over 90% holdings have given negative returns in the range of 35%-89%.