The total value of pledged or encumbered shares has more than doubled in the past three years amid the ongoing uncertainty Pledge in the domestic equity markets. In India, promoters are majority shareholders of entities that manage the day-to-day affairs of their companies. When promoters need money, they sometimes pledge or encumber some or all of their shareholding with lenders as collateral. This is one of the many sources of borrowing money, especially when liquidity conditions are tight and the markets are volatile
After spiking in FY22, the value of pledged or encumbered shares by promoters slid 16 per cent in FY23
Over the past few years, the top 50 companies by market cap (as on march 31 each year) witnessed a significant surge in the value of pledged or encumbered shares
Although the number of listed companies has increased on the NSE, the number with pledged shares has remained relatively stable over the past three years
Nearly 12 per cent of companies that got listed since FY18 have pledged or encumbered some of their shares
Check out companies, including Ambuja Cements, Hindustan Zinc, Adani Power, Vedanta, JSW Steel and Asian Paints, with maximum value of pledged or encumbered shares as on March 31, 2023
Companies that witnessed the highest increase/ decrease in pledged/encumbered shares in the Nifty 500 index in the March 2023 quarter include CG Power and Industrial Solutions,Triveni Engineering & Industries, Adani Ports and Special Economic Zone, Ajanta Pharma, Max Financial Services, Jubilant Ingrevia, Emami, The India Cements, RattanIndia Enterprises and Aster DM Healthcare
There were 29 companies on the NSE, where promoter pledging stood at 100 per cent as of March 31, 2023, against 28 firms in March 2022. 97 firms in the Nifty500 index have promoters who have pledged or encumbered their stakes as of March 31, 2023 against 90 in March 2022, as per ACE Equity