Advantage Promoters! | Value Research Promoters of a few companies took advantage of the cheap stock prices & escalated their holdings
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Advantage Promoters!

Promoters of a few companies took advantage of the cheap stock prices & escalated their holdings

Quite often, what's bad for one turns out to be good for the other. If someone is not interested in some particular situation, there's always someone else to take the plate. The same can be said about the retail investors' and company promoters' outlook towards the red-bearing stock markets. At a time when most retail investors have maintained a pious distance from the markets, the promoters have stepped in and taken advantage of the dirt cheap stock prices to strengthen their hold on businesses.

And this was done in two completely opposite manners. While some companies announced buyback offers to accumulate stocks and at the same time give their stock price a boost, others purchased shares from the open market in hush-hush affairs. Recently, Dr Reddy's Laboratories, in a filing with the Bombay Stock Exchange said that a promoter group firm, Dr Reddy's Laboratories Holdings Pvt. Ltd, purchased shares representing 0.24 and 0.11 per cent of shares of the company's stock on 31st July and 5th August respectively, taking the total shareholding on two accounts to 22.70 per cent and to 22.82 per cent.

On a broader scale, when we look at the shareholding pattern of companies that are a part of BSE 500, it is apparent that the companies did take advantage of the slowdown in the capital markets. Obviously, the most prominent amongst them are the ones that announced buyback offers during this period, from December 2007 to June 2008. In totality, 126 companies witnessed an increase in their promoters' stake, 146 saw a decline and the other 200 saw no change.

The prominent companies that accumulated shares through buyback offers were Reliance Infrastructure, Mastek, Goldiam International, Patni and SRF. The promoters of Reliance Infrastructure hiked their shareholding from 34.68 per cent to 36.65 per cent, up almost 2 per cent. Promoters of Mastek hiked their holding from 40.23 per cent to 41.5 per cent, up 1.27 per cent. At the same time, Goldiam International - a jewellery exporter based in Mumbai, upped its holding from 50.85 per cent to 51.25 per cent.

Apart from these companies, some other prominent ones that increased their holdings were Amtek Auto and Amtek India, from 30.94 per cent to 34.25 per cent and 31.31 percent to 34.42 per cent, respectively. Promoters of rice processing company REI Agro hiked their stake by 3.60 per cent to 38.32 per cent and SREI Infrastructure Finance Ltd - a leading non-banking financial institution and the only private sector infrastructure financing company - elevated its stake from 20.10 per cent to 25.05 per cent


On the other side of the coin, a few of the prominent companies that saw a decline in their promoters' shareholdings were Adlabs Films, Anant Raj Industries and Bharti Shipyard. But overall, the high-on-cash 'promoters group' took full advantage of the prevailing situation to get a better hold onto their businesses.

How They Stack Up
  Promoters Holding %     Price  
Company  Dec-07  Jun-08   Dec-07  Jun-08
GTL 34.4 44.14 277.85 203.6
KEC International 34.61 41.54 822.45 404.35
Welspun-Gujarat Stahl 37.57 44.49 456.85 301.95
Walchandnagar Industries* 48.01 54.43 822.1 237.9
Apollo Tyres 34.13 37.79 53.8 32.55
Aptech 28.81 32.31 425.45 194.85
Escorts 30.29 33.35 162.25 71.9
KLG Systel 25.74 28.6 940.5 376.8
Indiabulls Fin. Services 27.11 29.74 979.75 257.55
Balrampur Chini Mills 33.79 35.67 112.8 79.55
Sintex Industries 30.74 29.15 570.35 308.55
India Infoline 35.75 33.43 385.58 100.4
Cairn India 68.99 64.76 257.7 274.65
Ispat Industries 45.95 41.13 82.45 21.65
Bharati Shipyard 43.33 36.31 769.3 310.2
Source: CMIE, * Stock split of 1:5 and 1:1 bonus equity shares

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