Promoter pledging: Value of shares falls to 7 per cent in February

The value of shares pledged by promoters of the BSE-listed companies reached over Rs 2.54 trillion at February-end, a decline of 7 per cent compared to the previous month, according to exchange data.

The value of pledged shares stood at Rs 2.72 trillion at the end of January. It was at Rs 3.03 trillion at December-end. Prior to that, it was Rs 2.78 trillion at the end of November.

Till February this year, pledging of shares by promoters was seen in as many as 3,062 out of 5,054 the BSE-listed companies with a market capitalisation of Rs 146 trillion.

Share pledging is typically done by promoters to raise funds either for the same company or for financing other projects. A decline in the level of share pledging may indicate scaling down in stress as high pledging levels are not considered as a good sign by investors as a downturn in the market price can lead to invocation and change in management.

According to the BSE data, promoters of 448 companies pledged up to 30 per cent of their respective holdings to the tune of Rs 1.4 trilliion, while 154 firms saw 30-50 per cent of the promoters’ holding worth Rs 471.15 billion being pledged in February. Further, there were 78-odd companies in which 50-75 per cent of the promoter-holding worth Rs 311.49 billion was pledged. In addition, promoters of three firms pledged stake between 75 per cent and 90 per cent.