Finance minister has asked SEBI to consider to reduce maximum promoter shareholding from current level of 75 per cent to 65 per cent. Meaning thereby, minimum public shareholding for listed companies has to be increased from current level of 25 per cent to 35 per cent.
Based on the latest shareholding data available, our research shows 1,174 listed companies have promoter shareholding above 65 per cent. In other words, 25 per cent of the entire universe of listed companies (around 4,700 companies) will have to go through off-loading promoter stakes to meet this requirement.
At the current market prices, the total quantum of sale that needs to be done by these 1,174 companies works out to about whopping amount of Rs 3,87,000 crore.
While we need to await SEBI regulations regarding how much time will be given to these companies to meet with this minimum public shareholding norms, the overhang of this requirement of off-loading of promoter shareholding can have significant impact on the markets and the specific stocks. The regulator needs to provide sufficient time to meet this requirement so as not to over-flood the markets with stake sales by promoters.
Top three companies in terms of quantum of sale would be TCS (around Rs 59,600 crore), Wipro (around Rs 15,000 crore) and D-mart (Rs 14,000 crore)
The author is senior vice-president and head of research at Centrum Wealth. Views expressed are his own