Promoter pledging dips for 4th quarter due to rising market valuations

Among BSE 500 stocks, Max Financial Services, Eris Lifescience, Ashok Leyland, Jubilant Foodworks and Lloyd Metals saw an increase in promoter pledges

Promoter pledging has declined for a fourth straight quarter as increased market valuations help India Inc borrow by pledging fewer shares.

At the end of the January-March quarter (Q4) of 2023-24 (FY24), the pledged shares as a percentage of total promoter shareholding dipped to 1.1 per cent from 1.17 per cent in the October-December quarter of FY24, according to an analysis by Kotak Institutional Equities (KIE).

The value of pledged promoter holdings stood at Rs 1.96 trillion, about 0.56 per cent of the total S&P BSE 500 index’s market capitalisation.

The BSE 500 rose 4.3 per cent in Q4FY24, while it rallied 32 per cent during the 12 months ended March 2024.

Since the April-June quarter (Q1) of 2022-23 (FY23), promoter pledging has consistently declined.

Promoters of 73 companies in the BSE 500 have pledged part of their holdings in Q4FY24, down from 86 companies at the end of Q1FY23.

None of these companies had more than 75 per cent of their holdings pledged.

Among BSE 500 stocks, Max Financial Services, Eris Lifesciences, Ashok Leyland, Jubilant FoodWorks, and Lloyds Metals & Energy saw an increase in promoter pledges.

On the other hand, Kalpataru Projects, Bharat Forge, GMR Airports Infrastructure, Lemon Tree Hotels, and Tata Communications saw a reduction.

No company reported fresh pledges during Q4FY24. Promoters of Bharat Forge, Lemon Tree Hotels, and Tata Communications released their entire pledged holding, according to the KIE report.