There are few companies available at attractive valuations and promoters of those companies are buying stocks of own ocmpanies from open market. Of the 2,023 companies which filed shareholding pattern for the quarter ended March 2009, as many as 549 companies have seen an increase in shareholding of the promoter group. At the same time, few of the promoters are selling stocks and reducing their stakes.

“The increase in promoters holdings is a clear signal of the value present in companies after the correction witnessed in their stock prices over the last few quarters,” said Hitesh Agarwal, head (Research) at Angel Broking.

Sebi rules allow promoters to increase their stake through the open market by as much as 5% every year. In some cases, stakes could have gone up due to a merger or a share buyback. Therefore, any shareholding increase of more than 5% means there has been an extra activity during the quarter like a merger or a share buyback.

According to a data collated by CMIE, a number of companies has seen promoters hiking their stakes between 2% and 4% in the quarter. “In the case of Avery, the promoters increased their holding by 20% through to a public offer. Besides, a lot of promoters increase their stake to have a stronger holding in the company,” said K Ramakrishnan, executive director and head (Investment Banking) at Spark Capital. Companies like SREI Infrastructure Finance saw its promoters hike stake by 4.97%, Adlabs (3.68%), M&M (2.71%) and Zensar 2.72%.

“Sometimes promoters have had to increase their holdings to ward off takeover threats in wake of the low valuations. Nonetheless, generally, the act of increasing promoter holding in a company points to greater faith of the promoters in the company and also boosts shareholders’ confidence,” said Agarwal of Angel Broking. “

Promoters buying selling stocks NSE BSE

However, it is important to keep track of the fundamentals of the company and check the quantum of the hike and ensure that it is not merely a window dressing act.”Of all the companies which have filed the shareholding pattern, 1,314 companies did not see any change in their promoter holdings, while 160 companies saw a dip. The promoters of Karuturi Global dropped stakes by 7.11%, Bank of Rajasthan (-3.6%), Punj Lloyd (-2.78%), and scam-hit Pyramid Saimira saw its promoters holding drop by 14.99%.

Source: TimesBusiness

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