|
|
|
Share pledging rises across sectors: All's well with corporate India?
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 23 Feb, 2019
Busting the notion that share pledging by promoters is on the rise in
sectors such as energy and infrastructure where incidence of stressed
assets is climbing, owners of companies across sectors, some relatively
financially healthy ones, are using pledging to meet their urgent fund
requirements.
According to a report by Kotak Institutional
Equities, promoters of a total of 116 companies, or one-fifth of BSE-500
entities, pledged their holdings by December last year. Though the
numbers increased over the quarter ended in September only marginally
from 114 then, the growth trajectory has been consistent in indicating
that not all is well in the corporate circles and earnings are yet to
reach stable levels.
The list of 116 includes companies across
sectors including Indiabulls Real Estate, Coffee Day Enterprises, Jain
Irrigation Systems, Infibeam Avenues and Jindal Steel & Power. These
entities saw highest surge in the pledged promoter holdings in the
December 2018 quarter. Others like Texmaco Rail, Uflex and Wockhardt
pledged their shares for the first time.
While promoters
increased the quantum of pledged shares from 40 to 61 per cent between
September and December period last year, a growth of over 21 per cent,
Coffee Day saw pledging increasing from 59.7 per cent to 79.4 during the
same period. Jindal Steel & Power also pledged 50.2 per cent of
promoters holding with banks and financial institutions.
"The
pledging has picked up post-2014, after Non-Banking Financial Companies
(NBFCs) became a lot more aggressive in lending to promoters. This
arrangement worked well till 2017 when the mid-cap and the small-cap
shares were having a positive run. Tables turned only after the mid-cap
and small-cap stocks started correcting due to the weak sentiments
hitting this section of the market. This has made companies with high
levels of pledged share riskier for investors," said Mayuresh Joshi of
Angel Broking.
A case in point here are companies such as CG
Power and Industrial, Kwality, IL&FS Transportation Networks,
Hindustan Construction Co, Jindal Stainless Hissar and Sterlite
Technologies where promoters have pledged more than 90 per cent of their
holdings to raise funding support.
According to Kotak Equities,
the percentage of pledged promoter holdings stood at 6.7 per cent in the
December quarter similar to that of September 2018. But outstanding
promoters' pledged shares were at a high of Rs 1.96 lakh crore, which is
about 1.47 per cent of the total BSE-500 Index's market capitalization
in December 2018.
But the Kotak report has also clarified 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.
While
increasing number of promoters are raising pledging, a chunk of
companies have also bucked the trend and actually paid banks to free up
shares. Kotak report said that promoter holdings declined in companies
such as Fortis Healthcare, Suzlon Energy, Advanced Enzyme Technologies,
Adani Transmission and Indiabulls Housing Finance in the December
quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|