Pledging Of Shares

Adani Group: The repayment of the loan will release the pledge on shares of promoters in four Adani Group companies, Adani Enterprises, Adani Ports, Adani Green Energy and Adani Transmission

TMS Ep367: India's infra ambitions, Railways, markets, pledging of shares

Will the Adani crisis affect India's infra ambitions? What challenges Budget bonanza present to Railways? Which risks did Q3 earnings highlight for India Inc? What is pledging of shares? Answers here

Data collated by BS Research Bureau shows Hindustan Zinc and Vedanta have topped the list of companies where the promoters' pledged stake is the highest as of June-end

Earlier deadline was July 1; Move follows request by depository firms tasked with readying the backend for the new system for extension as the "changes to the systems are still under process"

Trend suggests those who had pledged their shares chose to redeem it as markets soared rather than borrow more heavily.

Pledging of shares by promoters in the NSE-listed firms reached at 1.86% of the total market capitalisation in August, making it the highest in three years, according to a report by primeinfobase.com

The brokerage said the decline is on account of rejig in the BSE 500 index and also due to the complete release of pledged shares in case of some companies

Pledging of shares where promoters use their shares as collateral to raise money is not a new phenomenon but has become popular amongst promoters in recent years

In both Zee and Reliance Group, the promoters will have to sell their assets, as a sharp fall in their share prices forced them to top up their already pledged shares

Pledging of shares does not necessarily imply that a firm or a promoter is under financial stress

What does it mean if the shares of a company are pledged by the promoter? Pranav Haldea, managing director of Prime Database, says pledging of shares by promoters is by itself not a bad thing, as it is the fastest and cheapest way to raise funds. But, a combination of high levels of promoters pledging shares, high debt and bad financials can be risky. "While there is no scientific number to the percentage of promoters' shareholding under pledge, if it is more than 50-60 per cent, I would stay away from such companies. Additionally, if there is a market correction and share prices fall, there could be a margin call which might even lead to a change in management. As an investor, I would watch out for such events,'' he adds.Of the 1,517 National Stock Exchange-listed companies, promoters' shares were pledged in as many as 509 companies as on June 30, compared with 496 companies a year before.As on August 11, the number of companies in which promoters' shares were pledged increased to 522