Anil Ambani-led Reliance Naval and Engineering, IL&FS Transportation Networks are among the firms whose promoters pledged more than 95% of their shareholdings, according to a report. We take a closer look.
Even as firms with pledged shareholding continue to remain in focus after the recent crash in Essel Group-promoted stocks, a few companies including Anil Ambani-led Reliance Naval and Engineering, IL&FS Transportation Networks and Sterlite Technologies have pledged shareholding of more than 95%, according to a report.
In its latest report, analysing the pledged holdings of BSE-500 stocks, Kotak Institutional Equities found that in CG Power and Industrial, Kwality, Reliance Naval and Engineering, IL&FS Transportation Networks and Sterlite Technologies, the promoters have pledged more than 95% of their shareholdings.
Notably, promoters of 116 companies pledged their holdings among BSE-500 Index stocks compared to 114 companies in September 2018 quarter. Six companies had more than 90% of their promoter holdings pledged, said the report. “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,” analysts at Kotak Institutional Equities added.
Interestingly, a few firms in which pledged promoter holdings declined include Fortis Healthcare, Suzlon Energy, Advanced Enzyme Technologies, Adani Transmission and Indiabulls Housing Finance. Notably, the total percentage of shares pledged by promoters dropped to 7.8% in the December quarter over the last quarter’s 8.3%. This is the lowest in the last nine quarters. According to the latest figures, outstanding promoters pledged shares were Rs 1.96 lakh crore, which is about 1.47% of the total BSE-500 Index’s market capitalization in December 2018, found the study.
In case of a few firms– Texmaco Rail, Uflex and Wockhardt, there has been fresh promoter pledges. Nifty firms with more than 5% of pledged promoter holdings were Zee Entertainment (59.4%), Adani Ports & SEZ (45.5%), JSW Steel (43.6%), IndusInd Bank (26.4%) and Indiabulls Housing Finance (12.7%), said the report. Indiabulls Real Estate, Coffee Day Enterprises, Jain Irrigation Systems, Infibeam Avenues and Jindal Steel & Power saw highest increase in pledged promoter holdings.