Promoter pledging: Value of shares falls to 7% in February

The value of shares pledged by promoters of the BSE-listed companies reached over ~2.54 trillion at February-end, a decline of 7 per cent compared to the previous month, according to exchange data.

The value of pledged shares stood at ~2.72 trillion at the end of January. It was at ~3.03 trillion at Decemberend. Prior to that, it was ~2.78 trillion at the end of November.

Till February this year, pledging of shares by promoters was seen in as many as 3,062 out of 5,054 the BSE-listed companies with a market capitalisation of ~146 trillion.

Share pledging is typically done by promoters to raise funds either for the same company or for financing other projects. A decline in the level of share pledging may indicate scaling down in stress as high pledging levels are not considered as a good sign by investors as a downturn in the market price can lead to invocation and change in management.

According to the BSE data, promoters of 448 companies pledged up to 30 per cent of their respective holdings to the tune of ~1.4 trilliion, while 154 firms saw 30-50 per cent of the promoters’ holding worth ~471.15 billion being pledged in February. Further, there were 78-odd companies in which 50-75 per cent of the promoter-holding worth ~311.49 billion was pledged. In addition, promoters of three firms pledged stake between 75 per cent and 90 per cent.