India Inc’s efforts to cut debt have likely given visible results, with a widespread fall in promoters’ pledged shareholdings in almost all Nifty 50 companies in the January-March quarter. What’s more, no BSE 500 company now has more than 90% of their promoter shareholding pledged, brokerage firm Kotak Institutional Equities said in a recent report. Indian companies have been working towards improving balance sheets and trimming debt in the last one year as the cost of funds moved to historic lows.
Promoters of Suzlon Energy, Future Consumer, and Max Financial Services have the highest pledged holdings. Among Nifty 50 companies, only IndusInd Bank didn’t see a fall in pledged promoter shareholding, the report said. High promoter pledging does not indicate a company is under financial stress.
Fall in promoters’ pledged shareholding in BSE 500 in January-March:
* Pledged holding down to 1.64% in January-March from 2.09% in October-December
* Value of promoter pledged holdings Rs 1.6 lakh crore, about 0.81% of the total BSE 500 Index’s market capitalization
* Zero company with over 90% of promoter holding pledged, down from five in the previous quarter
* Three companies with 75-90% of promoter holding pledged, down from seven in the previous quarter
* Promoters of 85 out of BSE 500 companies pledged part of their shareholdings.
Top companies with promoter pledges:
* Suzlon Energy – 88.5% of the total promoter shareholding
* Future Consumer – 88.4%
* Max Financial – 84.5%
In value terms…
* Hindustan Zinc – Rs 17,100 crore
* Adani Ports & SEZ – Rs 14,500 crore
* Asian Paints – Rs 12,100 crore
Largest decline in pledged promoter holdings
* Adani Ports: from 38.2% to 16%
* Crompton Greaves: from 65.6% to 18.3%
* Adani Transmission, Laurus Labs, Future Retail, JSW Energy, and Adani Enterprises are some of the other firms where promoter pledging was reduced significantly.
IndusInd Bank raises promoter pledges
IndusInd Bank had no promoter pledges at the end of December 2020, but by March-end pledges made 36.4% of the promoter shareholding. Aurobindo Pharma, Aster DM Healthcare, Wockhardt, Ashok Leyland, and Deepak Fertilisers all saw an increase in promoter share pledging.