Fundamental Analysis - Promoters Shareholding Pattern

By June 2013, promoters of all listed companies in this country have to reduce their stakes to 75%. Various counts indicate at least 200 companies, including several government-owned ones, are far away from meeting the 25% minimum public shareholding mandate. The challenge is 3 fold - time is short but SEBI seems to be in no mood to relent and unless the government changes its mind, June 2013 is a hard limit.

The second challenge is the market environment - nobody can fix that. And the third issue is the lack of suitable dilution methods. Companies, their lawyers and bankers complain that by restricting the dilution routes to 3 acronyms - FPO, OFS and IPP- SEBI is being too prescriptive or restrictive.

SEBI Chairman UK Sinha told about this in response:

"People who are raising these issues they do not have their heart on diluting. I am levelling this allegation that if there are so many options available why can't you as a promoter reduce by 1%. Show me your intention, why is that intention not being shown? Just imagine there are 30 companies who are less than 10% and this rule has been in place since 2001. In last 11 years you didn't find any opportunity to dilute and you are as low as 2% how ill you reach 25%? Please show your intent, don't expect everything from SEBI. I am giving an assurance that we are willing but where is the action from your side, please do that. You will find us very responsive. If I find that companies are very keen and they are serious about diluting their stake then the manner in which they can divest or not divest that will not come in the way. We are looking at the entire thing in a fresh manner. Just because the avenues are limited that will not come in the way, we will provide them all the legitimate avenues."

So what are the additional avenues that India Inc wants in order to meet the 25% challenge. Joining me with their lists are Sanjay Sharma of Deutsche Bank, Somasekhar Sundaresan of JSA and Manan Lahoty of Luthra.

FII’s  shareholding pattern !

The sell-off by foreign institutional investors in government securities has finally caught up with the equity market. With the rupee close to its record low and the pressure on the currency expected to persist near term, fears are that FIIs will start pulling money out of Indian shares as well.

Stocks have been beaten down to a point where it may not make much sense for the long term players among FIIs to sell at these levels. However, short term players like hedge funds and exchange traded funds are another class of investor altogether.

These funds chase quick gains, and absolute price moves and currency swings matter more than fundamental factors. Beyond a certain threshold of tolerance, they will dump shares irrespective of the price.

The spotlight is now on the companies where FIIs increased their stake in the recent past (data is available only till the March quarter)

An analysis of the shareholding pattern of BSE-100 companies shows that foreign funds have hiked stake in nearly 50 companies by 1-9 percent between September 2012 and March 2103. So far this calendar, till May, foreign funds net bought around Rs 61,000 crore of shares. There is no way of knowing how much of the money has come from long term players like pension funds, insurers and India-dedicated funds, and how much from short term funds.

Source: Capitaline. % Chg is the price change from May 17 to June 20

Company	FIIs holding (Mar qtr)	FIIs holding (Sep qtr)	Inc in Holding	% Chg
Shriram Trans	49.45	40.97	8.48	-7.00%
Axis Bank	40.94	32.79	8.15	-19.10%
Suzlon Energy	13.13	5.43	7.7	-35.10%
IndusInd Bank	40.49	34.26	6.23	-12.10%
Federal Bank	45.93	39.89	6.04	-9.70%
Zee Entertainment	41.69	36.14	5.55	-6.10%
NTPC	9.37	3.95	5.42	-12.30%
Dr Reddy's Labs	29.66	24.52	5.14	0.00%
M & M	35.01	30	5.01	-4.50%
HDFC	73.67	68.72	4.95	-9.60%
Satyam Computer	30.35	26.01	4.34	5.80%
NMDC	4.76	0.66	4.1	-15.50%
HCL Technologies	24.32	20.31	4.01	5.50%
Adani Enterp	18.97	15.08	3.89	-22.30%
HPCL	9.75	6.24	3.51	-19.50%
Cipla	23.89	20.79	3.1	-10.70%

FOR EXAMPLE : The list is extending……….

Company	%Holding	Rs Crore	No. of Holders
HDFC	73.64	85,302	1,093
Winsome Diamond	58.6	34	24
IDFC	52.19	8,469	460
Tata Motors (D)	52.12	3,167	146
Strides Arcolab	51.74	2,435	108
Jain Irrigation	50.3	1,065	168
Shriram TransFi	49.74	7,273	400
Yes Bank	46.03	4,680	383
Federal Bank	44.34	2,410	210
Jubilant Food	44.02	3,061	140
South Ind Bk	43.75	1,196	69
Indiabulls Hsg	43.25	2,636	184
Zee Entertain	42.51	9,786	451
Apollo Hospital	42.43	5,389	347
Manappuram Fin	42.31	444	75
IndusInd Bank	42.28	8,288	308
United Spirits	42.06	13,812	479
India Infoline	41.85	640	70
Axis Bank	40.7	20,721	701
Infosys	39.55	67,256	745
ICICI Bank	39.22	39,614	1,075
Int Conveyor	38.82	27	5
Monnet Ispat	38.78	246	57
M&M Financial	38.16	5,122	218
United Phos	37.6	2,279	235
Redington	37.57	790	98
NCC	37.46	187	72
Hexaware Tech	36.21	1,280	137
Mcleod	35.96	1,085	148
SKS Microfin	35.83	476	42

* N.T Not Traded since last 15 days.