NSE promoters' pledged shares average at 6-year high

The average percentage of shares pledged by promoters of the NSE-listed companies touched a 6-year high, although there was a marginal decline in value terms to Rs 1.79 lakh crore during the financial year ended March 31.

The average percentage of holdings pledged has gone up to a 6-year high of 45.98% at the end last fiscal, from 44.99% in March last year, according to a report by Prime Database.

The value of shares pledged by promoters of the National Stock Exchange-listed companies was down 1.66% to Rs 1.79 lakh crore as on March 31, 2016, compared to Rs 1.82 lakh crore in March-end last year.

Tata Consultancy Services (TCS) topped the list of firms with the highest pledging in value terms. Promoters have pledged shares worth Rs 11,490 crore or 3.15% of their total holding. This is followed by Cairn India (Rs 9,931 crore; 57.49%), Adani Ports & Special Economic Zone (Rs 9,865 crore; 34.18%), JSW Steel (Rs 7,069 crore; 54.98%) and Asian Paints (Rs 5,801 crore; 13.19%).

"Even though overall pledge levels have gone up, given the fall in equity markets over the last year, the value has remained constant," Prime Database Managing Director Pranav Haldea said. Promoters pledge shares to raise funds for use in the same company or for financing projects of group companies.

As of March 2016, pledging of shares was seen in as many as 505 of the 1,514 NSE-listed companies. In comparison, such pledging were witnessed in 492 companies in 2014-15.

"High pledge 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," he added. As of March 2016, there were as many as 25 companies in which the complete holding (100%) of the promoters was under pledge as on including AGC Networks, Arshiya, Bajaj Hindusthan Sugar, IL&FS Investment Managers, IVRCL, JMT Auto, Subex and Surana Industries.

Besides, there were as many as 73 companies in which more than 90% of the promoter's shareholding was pledged and 209 companies in which more than 50% of the promoter/s shareholding was pledged.