Home Market Promoters just upped stakes in these firms; should you buy their confidence?

Promoters just upped stakes in these firms; should you buy their confidence?


These are turbulent days for stocks. But promoters have gone ahead and made a statement by lapping up stakes in their own companies.

That merits the question, do promoters know the true worth of their business?

As the domestic equity market went through a volatile phase during the second quarter, promoters of close to 350 companies — barring PSU banks — on the BSE have increased their stakes across the board.

Monnet Ispat & Energy, Vodafone Idea and Dish TV all saw a substantial rise in promoter holding during the quarter gone by. Idea Cellular and Vodafone completed merger of their India operations on August 31.

The promoter share in Monnet Ispat jumped to 74.37 per cent in Q2 FY19 from 25.27 per cent in Q1 FY19 while the holding in Vodafone Idea stood at 71.33 per cent as of September 30 against 42.56 per cent in the preceding June quarter, data available with Ace Equity showed.

The figures are as of October 25.

JSW Steel and its promoters have acquired around 88 per cent stake in Monnet Ispat and Energy following completion of insolvency resolution proceedings, MIEL said in September.

Websol Energy Systems, Kilitch Drugs, Hathway Cable & Datacom, IDFC Bank, Mcnally Bharat Engineering, DCM Shriram Industries, Akzo Nobel, Sintex Plastics, DB Corp, Hindustan Foods, HDFC Bank, Mcleod Russel, and Hatsun Agro Products are among others where promoters upped their stake during the quarter gone by.

Kilitch Drugs, a pharmaceutical exporter, is all set to boost its expansion plans in Africa with its first manufacturing plant in Addis Ababa, capital of Ethiopia, the company told exchanges on Wednesday.

Why do promoters raise stake in their own business? In most cases, they find value in the stock or prepare for a positive development in the company. Sometimes, they do so to avert any possible hostile acquisition.

Out of the 348 BSE stocks that saw promoters stocking up, 305 moved southwards in 2018 so far. But Darjeeling Ropeway is a picture in contrast. The company, in which promoters raised their stake to 32.38 per cent in Q2 FY19 from just 1.22 per cent in Q1 FY19, delivered 448 per cent returns to investors on a year-to-date basis.

Satia Industries, Capital India and Punjab Alkalies also more than doubled investor money this year. Tijaria Polypipes, SPL Industries, Kilitch Drugs, Everlon Synthetics, Chembond Chemicals, Sangal Papers, Vantage Corporate Services, and Birla Precision too gained anywhere between 40 per cent and 75 per cent in 2018 so far.

In the auto and auto ancillary space, Tata Motors, Scooters India, Steel Strips, GNA Axles, Lumax Industries, RACL Geartech, Rico Auto, Kinetic Engineering, Autolite (India), Bharat Seats and JMT Auto saw promoter holdings go up during the said quarter.

Coming to chemical firms, promoters scaled up their stake in Atul Ltd to 44.67 per cent from 44.65 per cent. Dhunseri Petrochem, Balaji Amines, Ultramarine & Pigments, Jyoti Resins & Adhesives are other notable names that saw promoter interest.

Promoters also upped their play in Manpasand Beverages, Waterbase, Vadilal Industries, Hindustan Foods, Indiabulls Real Estate, and Rainbow Foundations during July-September.

Original Article