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Company promoters increasing stake consistently in last 4 quarters

Amir Shaikh
/ Categories: DSIJ Mindshare
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Company promoters increasing stake consistently in last 4 quarters

Generally, the promoters or promoter groups are the ones who have major control over the company and may also hold senior executive positions. As a result, they are in a better position to understand the company’s day-to-day performance and future outlook. Thus, a higher promoter and promoter group shareholding is considered as an ideal.

Furthermore, increasing promoters’ stake indicates that they are convinced of the stock price being undervalued or perhaps, the company is likely to grow faster in the future.

Following is a list of companies whose promoters have increased the stake more than ~2 per cent YoY in June 2020 ended quarter. Also, we have added a market cap limit of minimum Rs 1,000 crore and the promoters stake should be increasing consistently in the last four quarters.

Company Name Industry Q1FY21 promoter holding (%) Q1FY20 promoter holding (%)
Shakti Pumps (India) Ltd. Compressors / Pumps 53.64 48.25
Indiabulls Housing Finance Ltd. Finance - Housing 23.66 21.64
Alembic Ltd. Pharmaceuticals & Drugs 69.57 65.22
Astec Lifesciences Ltd. Pesticides & Agrochemicals 72.3 68.14
NCL Industries Ltd. Cement & Construction Materials 42.33 40.32
Godrej Industries Ltd. Chemicals 64.2 61.33
Orient Bell Ltd. Ceramics/Marble/Granite/ 61.77 59.21
Action Construction Equipment Ltd. Engineering - Industrial Equipments 72.43 69.99
Lakshmi Mills Company Ltd. Textile 63.07 61.56
Cyient Ltd. IT - Software 23.25 22.74
Chambal Fertilisers & Chemicals Ltd. Fertilizers 59.92 58.77
Greenply Industries Ltd. Wood & Wood Products 52.02 51.03

Source: Ace Equity

Likewise, we have also shortlisted companies whose promoters are decreasing their stake consistently in the last four quarters.

Company Name Industry Q1FY21 promoter holding (%) Q1FY20 promoter holding (%)
Coffee Day Enterprises Ltd. Hotel, Resort & Restaurants 15.23 53.93
IIFL Wealth Management Ltd. Finance - Others 22.92 56.42
Dish TV India Ltd. TV Broadcasting  23.67 57.52
Tourism Finance Corporation Of India Ltd. Finance Term Lending 26.17 51.58
Eveready Industries (India) Ltd. Batteries 22.16 42.17
Zee Media Corporation Ltd. TV Broadcasting  44.86 57.74
HDFC Life Insurance Co Ltd. Insurance 60.41 74.49
Kotak Mahindra Bank Ltd. Bank - Private 26.07 29.98
Axis Bank Ltd. Bank - Private 15.99 18.1
HDFC Asset Management Company Ltd. Finance - Asset Management 73.95 82.71
AU Small Finance Bank Ltd. Bank - Private 29.01 32.19
Tanla Solutions Ltd. IT - Software 32.42 35.06
Dixon Technologies (India) Ltd. Consumer Durables - Electronics 36.11 38.92
Aarti Industries Ltd. Chemicals 47.45 48.97
Aarti Drugs Ltd. Pharmaceuticals & Drugs 60.51 62.25
Ultramarine & Pigments Ltd. Chemicals 52.5 53.73

Source: Ace Equity

An increasing or decreasing trend of promoters' holding should not be the only criteria while selecting stocks as there may be numerous reasons for increasing/decreasing the stake of promoters in the company, like HDFC AMC's promoters are unloading shares to comply with the minimum promoter shareholding criteria. Thus, investors should also focus on other parameters while investing in any company. 

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