Shares pledged by promoter groups declined in the December quarter to 2.28% from 2.52% in the September quarter. This comes after the pledged holding increased in the September quarter. Outstanding promoters’ shares were valued at Rs 1.65 lakh crore towards the end- December quarter, said Kotak Institutional Equities in a report.
The report mentions that 108 promoters had pledged all or part of their holdings. It is noteworthy that the proportion of promoter holdings has declined since 2017 where it stood as high as 3.07% in quarter-ended December. Similarly, it was at 2.98% in the quarter – ended December in 2018. The Securities and Exchange Board of India (Sebi) had revised disclosure norms in 2017 for pledged shares where listed companies had to include all direct and indirect pledges of promoters versus only the direct pledges earlier.
In Q3 FY20, there were few cases where promoters pared loan obligations by selling their stakes or through other means. In some cases, creditors invoked the pledge on shares, the report said.
Companies such as Gayatri Projects, Future Lifestyle, Dish TV India and Future Consumer have promoters who have pledged more than 90% of their holdings. However, there have been fresh instances of promoters pledging their shares in the subsequent quarter.
Some companies increased the promoters pledging and the maximum increase of promoter pledging of shares belonged to companies such as Future Consumer, Wockhardt, Crompton Greaves Consumer, Dhanuka Agritech and SpiceJet. As investors worked to hedge their risks, the stock of Future Consumer plunged 16.4 % while SpiceJet and Wockhardt stock plummeted 9.98% and 8.8% respectively. The stock of Crompton Greaves Consumer saw a 4.06% correction.
On the other hand, Bajaj Consumer Care and Nippon Life AMC saw the pledging of shares by their promoters revoked or invoked by their creditors.
“ 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,” said the brokerage in its report.