The value of shares pledged by the promoters of NSE-listed companies in the country reached Rs 1.94 lakh-crore level at the end of last fiscal, a surge of 27 per cent from year-ago level.
Share pledging is typically done by promoters to raise funds either in the same company or for financing other projects.
The increase in value of pledged holding can be partly explained by the rising stock prices.
– Prime Database Managing Director Prithvi Haldea said.
According to a report by Prime Database, value of shares pledged by promoters in NSE-listed companies stood at Rs 1.94 lakh crore as on March 31 compared with Rs 1.52 lakh crore a year back.
Even in terms of percentage of promoter holding pledged, the same has gone up to 43.36 per cent in March from 41.75 per cent last year.
“...it was expected that promoters’ pledged stakes would come down as higher share prices would create enough comfort zones for lenders,” Haldea said.
“However, this has not happened. Ironically, the need for promoters to pledge their shares should have been high in 2012-13 and 2013-14, when many companies were cash-strapped and finances were difficult to raise,” he added.
As on March 2015, pledging of shares were seen in as many as 495 of the 1,448 NSE-listed companies.
High pledging levels are typically not considered a good sign by the investors as a downturn in the market price can lead to invocation and change in management.
At end of 2014-15, there were 25 companies in which, the complete holding (100 per cent) of the promoters was under pledge including Bajaj Hindusthan, Gokaldas Exports, IL&FS Investment Managers, Subex and Surana Industries.
Besides, there were as many as 200 companies in which more than 50 per cent of the promoter’s shareholding was pledged and as many as 77 firms in which more than 90 per cent of the promoter’s holding was pledged.
Cairn India topped the list of companies with the highest pledging in value terms. Promoters have pledged company’s shares worth Rs 15,801 crore.
This is followed by Adani Enterprises (Rs 7,976 crore), Tata Consultancy Services (Rs 7,302 crore), JSW Energy (Rs 6,305 crore) and Asian Paints (Rs 5,366 crore).
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