The percentage of promoters’ pledged holdings has decreased to 1.1% in the March 2024 quarter, down from 1.17% in the previous quarter, according to a report by Kotak Institutional Securities. This decline represents a positive trend in the market, indicating a potential reduction in financial risk for companies.
In the BSE-500 Index, the value of pledged promoter holdings amounted to Rs1.96 lakh crore, equivalent to about 0.56% of the total market capitalization. The report highlighted that in the last quarter of FY24, promoters of 73 companies within the index had pledged a portion of their holdings.
Notably, there were no companies in the January-March 2024 quarter whose promoters had pledged more than 75% of their holdings, signifying a more stable financial landscape. Among the companies where pledged promoter holdings decreased were Kalpataru Projects, Bharat Forge, GMR Airports, Lemon Tree, and Tata Communications.
The report emphasized that the pledging of shares by promoters is a common practice to secure loans and does not necessarily indicate financial distress. It also noted that some companies, such as Bharat Forge, Lemon Tree Hotels, and Tata Communications, had released almost all of their pledged holdings.
Overall, the reduction in pledged promoter holdings reflects a positive shift in the financial health of companies within the BSE-500 Index, potentially boosting investor confidence and market stability.