The percentage of promoters’ pledged stake declined from 1.17% in the October-December 2023 quarter to 1.1% in the March 2024 quarter, a report by Kotak Institutional Securities said.
In the last quarter of FY24, promoters of 73 companies in the BSE-500 index have pledged part of their stake and the value of pledged promoter holdings was Rs 1.96 lakh Crore or about 0.56% of the market capitalization of the total BSE-500 index. The report said that “Our analysis of pledged holdings of BSE-500 shares shows that the value of promoter (majority shareholder) pledged stake as a percentage of promoters holding declined marginally to 1.10% from 1.17% in the March 2024 quarter”.
Promoters pledge shares as security to secure loans to meet any financial support necessity. This is a common practice adopted by companies. The report said that BSE-500 companies where mortgage promoter holdings declined during Q4FY24 include Kalpataru Projects, Bharat Forge, GMR Airports, Lemon Tree and Tata Communications. Max Financial Services, Eris Life sciences, Ashok Leyland, Jubilant Food works and Lloyd Metals were among the companies were pledged promoter holdings increased.
The report clarifies that pledging of shares does not mean that a company or promoter is in financial stress; Banks (lenders) could demand additional security in the form of promoter shares. Companies whose promoters released almost the entire pledged stake include Bharat Forge, Lemon Tree Hotels and Tata Communications. In the January-March 2024 quarter, there was no company whose promoters had pledged more than 75% of their stake.
