Skip to main content

Promoters raised stake in over 200 cos in Q1 FY21; 10 stocks rose 100-300%

 10 out of 211 companies rose more than 100 percent so far in the year 2020 that include names like IOL Chemicals, Titan Bio-Tech, Laurus Labs, Anuh Pharma, Astec Lifesciences, and Dishman Carbogen, etc.

Indian market rallied by about 20 percent in the June quarter and promoters used the momentum to increase their stake in their respective companies during the period.

Promoters raised their stake in 211 companies on a sequential basis in Q1, data shows. Of them, 1o stocks have risen more than 100 percent so far 2020 including IOL Chemicals, Titan Bio-Tech, Laurus Labs, Anuh Pharma, Astec Lifesciences, and Dishman Carbogen among others.

Even though some stocks from the mid & smallcap space more than doubled investors' wealth in 2020, most stocks were under pressure in the March-April period because of uncertainty due to the spreadd of COVID-19.

Hence, promoters used the opportunity to increase their stake, although marginally.

 “If observed closely, for most companies, promoters have increased stake negligibly around 100-200 bps in the June quarter. Steep correction in prices post March 2020 lows could be one of the most logical reasons for promoters to have added to their existing holdings,” Nirali Shah, Senior Research Analyst, Samco Securities told Moneycontrol.



Why Promoters raise stake?

Promoters could raise stake because of multiple reasons. It could be to increase their hold in the company or buy at prices where they think the stock is undervalued. But, the fact that promoters are raising stake amid a tough business environment, highlights their commitment and faith in their respective businesses.

“Promoters’ holding in the company is a significant parameter in stock analysis. Many times, the shareholding level acts as an important indicator and confidence level of the promoters in the business as well as the strength of leadership control on the company,” Gaurav Garg, Head of Research at CapitalVia Global Research Limited told Moneycontrol.

“From the investor point of view, this might act as a positive parameter as the overall objective of any business is to create the wealth for its shareholders,” he said.

Generally, any increase in promoter holding is read positively by the investor community.

“It is also understood that an increase in their holding is akin to putting money where one’s mouth is which ideally means that they actually believe in the future of the company and want to be a part of the journey. But again, investing blindly and solely on the basis of the increase in promoter stake would be a very risky proposition,” says Shah of Samco Securities.

Rise in stake despite falling stock

Of the 211 companies we looked at, 10 companies saw promoters raising stake despite a fall of more than 50 percent in calendar 2020.

Shah of Samco Securities says that an increase in promoter stake by a substantial amount would be a good parameter to look at before investing, however, it is certainly not the only factor to form a judgement about a stock.

“Given the uncertainty due to the pandemic, investors are advised to thoroughly check the consistency of future free cash flows, debt to equity ratio, interest coverage ratio, provisions, management’s assessment of the situation, promoter’s pledge, future Capex plans along with a number of other fundamental factors before taking any decision on stocks, buy or sell,” she added.



Stocks that have fallen more than 50 percent include names like Future Retail, Gayatri Projects, Canara Bank, IndusInd Bank, and Sadbhav Engineering among others. All these companies have a market cap of more than Rs 100 crore.

“I believe the growth factors might drive these stocks. Some of the quality companies like Indusind Bank, Sadbhav Engineering, Future retails and many others might turn out to be dark horse,” says Gaurav Garg of CapitalVia Global Research Limited.

“With global market rallying and good liquidity inflows, Indian equities may continue to shine and so will the stocks where promoters believe in the business,” he added.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com/SD Solutions advises users to check with certified experts before taking any investment decisions.

Comments

Post a Comment

Popular posts from this blog

Panacea Biotech shares hit 5% upper circuit after dengue vaccine completes phase I & II study

DengiAIl induced robust neutralising antibody responses against all the four dengue virus serotypes, the company has said in an exchange filing. Panacea Biotech share price hit 5 percent upper circuit on the BSE on September 24 after the company completed phases I and II study of its dengue vaccine candidate DengiAIl. "Panacea Biotec Ltd. is delighted to announce the successful completion of its Phase I/II study to evaluate the safety and immunogenicity of its vaccine, DengiAll, a single-dose liveattenuated tetravalent vaccine," the company said in an exchange filing. Live-attenuated vaccines contain weakened bacteria or viruses that trigger an immune response but do not cause disease. The company said DengiAIl induced robust neutralising antibody responses against all the four dengue virus serotypes. DengiAIl has been found to be safe and well-tolerated with no serious adverse effects, the company said. After a single-dose, more than 80 percent of the participants ...
Post a Comment
Read more

Taking Stock | Profit-booking pulls Nifty below 14,450; Sensex drops 549 points

  All the sectoral indices ended in the red with IT and PSU bank indices falling 2 percent each. The market remained under pressure on January 15 on the back of profit-booking across sectors amid weak global cues. At close, the Sensex was down 549.49 points or 1.11% at 49,034.67, and Nifty was down 161.90 points or 1.11% at 14,433.70. "The market witnessed profit-booking and following global trends. Nifty continues to resist 14,600 and has taken a dip towards 14,360. If the market closes below 14,380 levels, we might see a correction till the levels of 14,180-14,200. Momentum indicators like RSI, MACD are indicating a small correction in the markets," said Ashis Biswas, Head of Research at CapitalVia Global Research. All the sectoral indices ended in the red with IT and PSU bank falling 2 percent each. Broader markets performed in line with the main indices with BSE Midcap and Smallcap indices falling 1 percent each. Tech Mahindra, GAIL, HCL Tech, Wipro and ONGC...
Post a Comment
Read more

Similar to 2020, D-Street is at record high ahead of Budget 2021; will history repeat itself?

  Experts are of the view that a repeat of 2020 or what happened in March might not be possible but some consolidation cannot be ruled out. Back in March when everyone wanted to write-off 2020 from their books, hope and liquidity supported markets and investor sentiment. Nobody thought that after touching a 3-year low in March 2020, benchmark indices would give double-digit returns by the end of the year. The S&P BSE Sensex and Nifty50 rallied by about 15 percent in 2020 and the big outperformance came from the small and midcap stocks. The rally is still continuing in 2021. The S&P BSE Sensex, which climbed Mount 49K, is up over 3 percent while the Nifty50 is up over 4 percent so far in January. Sensex scaling the 49,000-mark and Nifty50 touching 14,500 levels ahead of the Budget 2021 could make anyone cautious about the strength of the rally. Back in January 2020, both Sensex and Nifty touched fresh highs ahead of Budget, and then the market fell like a pack of cards. The ...
Post a Comment
Read more