Promoters up stake in firms as markets drop

Tata firms, Bajaj group, Godrej see buying either by promoters or management

Updated - March 26, 2020 10:53 pm IST

Published - March 26, 2020 10:24 pm IST - MUMBAI

Bear markets usually offer great pickings for value investors looking to buy for the long term, says Utkarsh Sinha.

Bear markets usually offer great pickings for value investors looking to buy for the long term, says Utkarsh Sinha.

Indian promoters are using the drop in equity markets as an opportunity to consolidate their holdings in group companies.

This comes at a time when the Indian markets have witnessed an unprecedented correction over the last month and a half

Nifty is down 36% from recent highs and many stocks have seen significant correction.

The largest quantum of buying by promoters or top management was witnessed in the Tata Group (Tata Chemicals, Tata Steel, Indian Hotels, Tata Motors, Tata Power and Tata Consumer) and the Bajaj Group (Bajaj Finance, Bajaj Finserv, Bajaj Holdings and Bajaj Auto).

Promoters also enhanced their stakes in Mphasis, Maruti Suzuki, Sun Pharma, Godrej Industries, JSW Steel and GMR Infra.

L&T increased its holding in Mindtree from 60.55% to 61.07%.

Utkarsh Sinha, MD, Bexley Advisors, told The Hindu, “Bear markets usually offer great pickings for value investors looking to buy for the long term.

“We are definitely entering such a phase. And typically, a promoter is the definition of a value investor in his or her own company.”

Firms such as Sun Pharma, Emami and Granules India have announced share buy-backs.

“Buy-backs are not only the norm in such an environment, they may make the most sense for spending accumulated capital. If you are able to expand your equity pool in a bear environment, it gives you the ability to go back to the market on more favourable terms down the road,” Mr. Sinha added.

Motilal Oswal Research said there was a heightened activity in promoters buying / raising stakes.

“We expect the buy-backs to accelerate given the prevailing juicy valuations across sectors. Any relaxation on the buy-back tax front can prove to be a catalyst for more activity, in our view,” it wrote to its clients.

Tata Sons chairman N. Chandrasekaran has bought two lakh shares each of Tata Steel, Tata Motors and Tata Power each and one lakh shares each of Tata Consumer Products, Tata Chemicals, Tata Communications and Indian Hotels.

However, some promoters were seen reducing stakes.

Notable names where promoter holding had reduced over the last month include IIFL Wealth, Dixon Technologies, Varun Beverages and UltraTech Cement.

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