List of Companies Where Promoter Pledges Decreased in Q4FY24

The value of promoter pledged holding in the companies of the BSE 500 index as a percentage of promoter holding has reduced to  1.1% in Q4 FY 2023-24 from 1.17% in Q3 FY 2023-24, The percentage of the pledged holdings of the promoter is at the lowest in the last two years now, the decline in pledged promoter holding in this session also marks the third straight quarter of decline in promoter pledged holding.

What are promoter-pledged holdings?

Pledging of shares is one of the options that the promoters of companies use to secure loans to meet working capital requirements, and personal needs and fund other ventures or acquisitions. A promoter shareholding in a company is used as collateral to avail of a loan.

Pledging of shares has been seen as a crucial factor by the investors post the Satyam scam.

Promoter Pledged holding declined for 3rd straight session

The promoter pledged holdings for the BSE 500 companies declined for 3rd straight session in Q4, In this quarter promoter of 73 companies have pledged their holdings, this number is down from 86 companies at the end of Q1 FY 2022-23, Pledged promoter holdings amounted to Rs.1.96 trillion, representing approximately 0.56% of the BSE-500 index’s market capitalization. Notably, there was no company that had promoters pledging more than 75 per cent of their holdings. This data indicates a moderate level of promoter pledging within the market. However, it also highlights the importance of monitoring such activities to maintain market stability and manage potential risks associated with high levels of promoter pledging.

Max Financial Services, Eris Life Science, Ashok Leyland, and Jubilant Foodworks are among the companies in which pledged promoter holdings have been increased. Companies in which pledged promoter holdings have declined include Kalpataru Projects, Tata Communications, Bharat Forge, GMR Airports and  Lemon Tree. Under this, promoters of Bharat Forge, Lemon Tree and Tata Communications have almost released their entire pledged holdings.

Conclusion: The promoter pledging has dipped in this quarter due to rising valuations in the market as promoters can take advantage of this rise to repay the loans and reduce the pledges but this pledging of shares does not necessarily mean that the promoters of the company are in any kind of financial stress, The current percentage of promoters pledged holdings is the lowest in the last two years.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.