Monitoring pledged shares crucial, amid bad loan crisis: Edelweiss
Industrials, materials, consumer discretionary top pledged shares in terms of value
In the current bad loan scenario, monitoring pledged shares of promoters becomes extremely crucial, according to a report by Edelweiss.
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The report said bad loans were clearly one of the weak links in the system.
“These are the pockets which, we believe, are extremely vulnerable. One cannot afford to overlook such companies. Hence, monitoring promoter pledges becomes extremely crucial,” it added.
One of the ways promoters raise money is by pledging their shares to banks or financial institutions. In 2009, the Securities and Exchange Board of India (SEBI) made it mandatory for promoters of listed firms to disclose their pledged shares. The SEBI order came in the wake of the Satyam scam. Pledging of shares could have serious consequences when the lenders invoke the pledged shares for non-payment.
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At the end of the fourth quarter of 2017-18, 739 companies reported pledged holdings. ``This list is extracted from the universe of 4,310 companies that disclosed the shareholding as on Wednesday,’’ the report said.
Industrials, materials and consumer discretionary had the highest promoter pledges of shares in value terms in the fourth quarter of 2018, according to the report.
In value terms, industrials accounted for ₹ 70,400 crore in promoter pledges of shares, followed by materials at ₹ 50,200 crore and consumer discretionary at ₹ 42,200 crore, respectively, it added.
According to the report, GTL Infrastructure, Arshiya, Reliance Naval Engineering, Bajaj Hindusthan, N. R. Agarwal Industries, IL&FS Investment Managers, Yash Papers, IVRCL, Gammon Infra and JMT Auto have 100% of promoter holdings pledged.
The firms in which promoter pledge has risen over 5% and warrant attention include Prakash Industries, Emami, Adani Ports, Advance Enzyme, Cox & Kings, KPIT Technologies, Max Financial, Zee Entertainment, Adani Transmission and Dish TV.
According to the report, companies where promoters have pledged for the first time in two quarters included Bharat Wire, Mangalam Cement, AGC Networks, Shiva Cement, Camlin Fine, Century Enka, The Byke Hospitality, UPL Ltd, LEEL Electricals and Goldstone Infratech.
Firms where promoter pledge had fallen more than 5% included MT Educare, MSP Steel & Power, Bhansali Engineering, Nath Pulp Paper Mills, Marsons, Scanpoint Geomatics, Asya Infosoft, Mangalam Drugs, Uniply Industries, the report said.
The report also pointed to cases where there was no promoter pledge and yet increase in their stakes such as Bhansali Engineering Polymers Ltd., Pidilite Industries, Bharat Electronics, Bajaj Holdings, Indiabulls Ventures, JM Financial, Alembic Pharma, Raymond, FDC Ltd and VRL Logistics.