Promoter holdings private listed firms drops 600 bps to 37% since 2021

Promoters of India’s top private listed companies have cut their stakes sharply since 2021, taking advantage of elevated valuations and reshaping ownership dynamics in the market. 

Holdings of promoters in the top 200 privately owned listed firms declined nearly 600 basis points (bps) to 37 per cent at the end of FY25, from 43 per cent in FY21. The was led by large block deals, with domestic mutual funds stepping in as the primary buyers. 

Between FY21 and FY25, mutual fund holdings in BSE 200 companies rose by 360 bps to 10.9 per cent, while foreign portfolio investor (FPI) holdings fell 420 bps to 24.4 per cent, shows data compiled by Kotak Institutional Equities (KIE). 

 

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The shift reflects the trend of promoters capitalising on high valuations, with MFs, described by KIE as “price-agnostic”, continuing to absorb supply. “Retail households, through institutional investors, have bought at the expense of FPIs and insiders,” KIE said in a note. 

Domestic institutional investors (DIIs) have been net buyers of ₹3.5 trillion worth of equities in the first half of 2025, up from ₹2.4 trillion in the year-ago period. FPIs, by contrast, were net sellers of over ₹82,000 crore during the same period. 

Strong DII inflows have enabled the market to absorb large stake sales. British American Tobacco and Singtel offloaded shares worth nearly ₹13,000 crore each in ITC and Bharti Airtel, respectively, earlier this year.   

“Many promoters have raised capital for either new projects or debt reduction,” said U R Bhat, co-founder of Alphaniti Fintech. “Furthermore, when successful companies have promoters holding large stakes, they often seek to diversify their concentrated wealth by selling shares and investing elsewhere.” 

Promoters, being the most well-informed, strategically time these sales, Bhat said, adding they usually use block deals near the peak of their company’s cycle when buyer interest is high and valuations are favourable.  

“Conversely, during cyclical downturns, these companies can issue warrants to raise capital.” 

Lower promoter holdings have lifted India’s free-float market capitalisation, driving a jump in its weighting in global indices. India’s share in the MSCI Emerging Markets Index rose to 18.12 per cent in June 2025, from under 8 per cent in 2021, second only to China’s 28.4 per cent. 

Historically, India has trailed developed markets like the US, the UK, and Japan in free float, where public ownership usually exceeds 90 per cent. The recent rise brings India closer to markets like Brazil, South Korea, and Taiwan.   

The current trend contrasts sharply with 2009, just before the Securities and Exchange Board of India (Sebi) introduced the minimum 25 per cent public shareholding rule. Promoter ownership stood at a 19-year high of 57.6 per cent in March 2009.

 

“The long-term trend indicates a sharp rise in promoter ownership between 2001 and 2009 that gradually tapered off since, coinciding with Sebi’s decision to increase the required free float from 10 per cent to 25 per cent in 2010,” according to the NSE’s latest India Ownership Tracker.

 

While promoter ownership rose by 11.6 percentage points between June 2010 and December 2021, the trajectory reversed as domestic equities gained momentum.

 

KIE analysis suggests promoters are timing their exits. Promoter stake sales have historically peaked during periods of elevated Nifty valuations. The index is now trading at 22 times estimated 12-month earnings, compared with a long-term average of 20x.