Promoter sell-downs cross the 1% mark at more companies, shows data

Trend strengthens for second straight quarter

The share of promoters reducing their holdings picked up for the second quarter in a row in September. About 4.6 per cent of companies saw a promoter stake sale of 1 per cent or more in the three months ending September. Stake reductions can also occur through minor dilution, such as stock options. A 1 per cent threshold helps isolate companies with a more material change.

 

The analysis is based on shareholding data from 932 companies with a continuous decade-long record, covering constituents of the BSE 500, BSE MidCap, and BSE SmallCap indices. The proportion of large stake reductions in September was higher than in the April-June quarter and remained more than twice the levels seen in March.

 

A reduction in promoter stake may not necessarily signal that valuations have peaked, said Nipun Mehta, founder and chief executive officer of multifamily office BlueOcean Capital Advisors. He observed that many promoters still hold most of their wealth in their companies, keeping their fortunes tied to the business. “He’s got skin in the game,” Mehta said.

 

A global shift towards lower promoter holdings is also visible in new-age companies and startups, where founders often own very little compared to traditional Indian manufacturing enterprises, Mehta added. This trend may be slowly taking hold in India as well. 

 

Promoter stake sales had risen during the post-pandemic bull run amid elevated valuations, peaking in September 2024. The BSE Sensex hit an all-time high of 85,978.25 on September 27, 2024. It fell to 71,425.01 in April 2025, then bounced back to 80,267.62 by the end of September. It closed at 83,938.71 at the end of October.

 

Some of the largest reductions in promoter stake included Sadhana Nitro Chem (26.76 per cent), Eimco Elecon (24.68 per cent), Marathon Nextgen Realty (17.71 per cent), Lloyds Enterprises (11.19 per cent), and Rama Steel Tubes (10.08 per cent). These reductions may represent stake sales or capital-raising exercises.

 

A promoter group firm of Eimco Elecon, Tamrock Great Britain Holdings, sold its entire 24.68 per cent stake, according to company filings. Rama Steel Tubes cited a preferential allotment in its disclosures.

 

Emails to the five companies listed above did not receive an immediate response.

 

Key sectors with companies reducing promoter stakes include chemical, capital goods, steel, finance, real estate, cement, and healthcare. A shift in promoter behaviour may also be contributing to the rise in stake sales in recent years, according to a person who works closely with promoters. Earlier, promoters were often seen taking money out of their companies in ways that came at the cost of minority shareholders. Many have since realised that profitability and transparency can drive valuations higher — creating more wealth than old practices ever did. This has also reduced their ability to meet cash needs beyond their formal remuneration.

 

Structural shifts such as the goods and services tax, greater formalisation, digital payments with audit trails, and a growing share of services firms — which often allow fewer avenues for alternative accounting — have all played a role.

 

“Earlier that leakage that used to happen has dropped,” the person said.