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Promoters dilute stake in 20% of top 500 companies

Nearly a fifth of the top 500 listed companies saw a decline in promoter holding in the three-month period between June and September.

Nearly a fifth of the top 500 listed companies saw a decline in promoter holding in the three-month period between June and September. Experts attribute this trend to factors like margin calls getting triggered on pledged shares and infusion of fresh equity to fund capex plans. In some instances, promoters diluted their stake to comply with the public shareholding norms.

According to Capitaline, as many as 96 companies (out of 492 companies that so far announced their latest shareholding) have seen a fall in promoter shareholding on a sequential basis. Analysis of the promoter shareholding indicated that average promoter holding in these 96 companies ? the arithmetic mean of company stakes held by promoters ? declined 1.36 percentage points quarter-on-quarter in September.

Data also showed that a majority of promoters from IT software sectors diluted their stake. Tech Mahindra saw the biggest decline (14.10 percentage points) followed by Goldyne Technologies (9.73 percentage points) and NIIT Technologies (7.48 percentage points).

Other companies within the IT software space like Firstsource Solutions, Infotech Enterprises, Oracle Financial Services, Tata Consultancy Services, HCL Technologies, Wipro, Geodesic, 3i Infotech, eClerx Services and Mindtree fell in the range of 0.01 to 0.36 percentage points.

Markets experts said that the reasons for promoter stake dilution are typically company specific and a clear trend is difficult to establish.

?In case of Wipro, the company has to bring its promoter shareholding below 75% as per Sebi guidelines. For NIIT Technologies, the promoter sold the stake to fund the expansion plans of NIIT University. So, it is company specific,? said Rikesh Parikh, VP, market strategy, Motilal Oswal Financial Services.

However, experts said that promoter holding could have also reduced due to infusion of fresh equity (via QIPs or rights issue) or margin calls getting triggered, which could have led to selling of pledged shares in the open market. According to Sebi, Indian companies raised nearly R8,000 crore through primary markets, largely via rights issue and debt, in September.

Other sectors that witnessed a significant decline in promoter shareholding were pharmaceutical, FMCG, non-banking finance companies, telecom services, private banks, tyre manufacturing and agro chemical companies.

Among pharmaceutical companies, promoter shareholding in Dr Reddy?s Laboratories, Piramal Enterprises, Lupin, Ranbaxy, Sun Pharmaceuticals, Unichem Laboratories and Strides Arcolab declined marginally.

Among private banks, Axis Bank saw a drop of 1.07 percentage points in promoter holding. Further, promoter holding in other banks like IndusInd Bank, Kotak Mahindra Bank, HDFC Bank, Yes Bank, and ING Vysya Bank saw a marginal decrease.

Non-banking finance companies like Future Capital and SKS Microfinance saw a steep drop of 10.94 percentage points and 8.04 percentage points, respectively.

Others among NBFCs to see a drop in promoter shareholding include Bajaj Finserv Lending (0.11 percentage points), GRUH Finance (0.13 percentage points), JM Financial (0.04 percentage points).

?High cost of borrowings, in an environment when market conditions were discouraging and companies faced liquidity constraints, promoters may have marginally sold their stake,? said an Edelweiss Financial Services analyst.

According to Capitaline data, 74 companies out of 492 companies in the BSE 500 universe saw an increase in promoter shareholding sequentially. Nearly 66% or 322 companies witnessed no change in promoter shareholding, suggested the Capitaline data.

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First published on: 06-11-2012 at 00:58 IST
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