Promoters trimmed pledges in Q1 as markets down 10%, holdings down 1.5%

Share pledging by promoters declined during the April-June quarter (first quarter, or Q1) of 2022-23 (FY23) as markets fell close to 10 per cent.

According to a report by Kotak Institutional Equities (KIE), promoter pledged holdings - as a percentage of promoter holding - dropped to 1.5 per cent in Q1FY23, from 1.71 per cent in the January-March quarter (fourth quarter, or Q4) of 2021-22 (FY22).

The value of promoter pledged holdings stood at Rs 1.7 trillion, 0.77 per cent of the market capitalisation (m-cap) of BSE 500 companies.

In the preceding quarter (Q4FY22), the value of pledged holdings was at Rs 2.1 trillion, 0.86 per cent of m-cap. 

Promoter pledges were created in a total of 81 companies in Q1FY23.

Only three companies - Thyrocare Technologies, Max Financial Services, and Suzlon Energy - had more than 80 per cent of their promoter holdings pledged.

MedPlus Health Services, Sterling and Wilson, Jindal Steel & Power, Sobha, and Strides Pharma Science were among companies that saw substantial increase in promoter pledged holdings.

However, Lemon Tree Hotels, Adani Power, and Sun Pharmaceutical Industries saw a decline in promoter pledged holdings.

Cyient and ELGi Equipments saw fresh pledge creations during the quarter.

Among the Nifty50 companies with more than 5 per cent of pledged promoter holdings include Adani Ports and Special Economic Zone (13.1 per cent of promoter holding pledged), Apollo Hospitals Enterprise (16.4 per cent), Asian Paints (11 per cent), IndusInd Bank (45.5 per cent), and JSW Steel (15.8 per cent).

The note by KIE clarified that pledging of shares does not necessarily imply that a company or a promoter is under financial stress.