Promoter pledging increases in Dec quarter amid a spike in volatility

Share pledging by promoters rose during the December 2021 quarter amid a spike in volatility.

According to a report by Kotak Institutional Equities (KIE), the value of pledged promoter holdings as a percentage of promoter holding rose to 1.6 per cent in December 2021 quarter, from 1.5 per cent in the September 2021 quarter. The value of promoter pledged holdings stood at Rs 1.97 trillion, 0.81 per cent of the total market capitalisation of the BSE 500 index.

About 78 companies in the BSE 500 Index had at least some part of their holdings pledged at the end of the December 2021 quarter. Of this, 18 had at least 25 per cent of their promoter holding pledged.

Companies that saw substantial increase in pledged promoter holdings include Max Healthcare, Solara Active Pharma, Strides Pharma, and Lemon Tree Hotels.

While those that saw decline include HFCL, Delta Corp, Emami, and Sun Pharmaceuticals.

In the Nifty50 index, companies with highest promoter pledge include Adani Ports (15.3 per cent), Asian Paints (7.6 per cent), IndusInd Bank (45.5 per cent), and JSW Steel (17.8 per cent).

“Only one company had more than 90 per cent of its promoter holdings pledged. 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,” said KIE in a report.