INSUBCONTINENT EXCLUSIVE:
As markets were volatile during the December 2021 quarter, many stocks saw a decent correction.When promoters of a company increase their
stake, there is a lot of curiosity in knowing why that happened.While promoters may have a hundred reasons to sell, they generally only have
one compelling reason to buy
The market thinks the promoters know something that it doesn't.As markets were volatile during the October-December 2021 quarter, many
stocks saw a decent correction
Seizing the opportunity provided by the correction, promoters increased their stakes.The same is not true in US though
Promoters of US based companies are offloading their stakes amid soaring market valuations.Let's take a look at 6 companies where
promoters increased their stake during the last quarter.#1 Tejas NetworksFrom a zero promoter holding entity since listing in 2017, Tejas
Networks became a promoter holding entity in December 2021 quarter.December 2021 shareholding data shows that promoter group holds 37.3%
stake in Tejas Networks.This was on the cards as the Tata Group had announced plans to acquire stake in the domestic telecom gear firm
With this, the Tata Group acquired a controlling stake in Tejas Networks.Tata Sons and its subsidiaries Panatone Finvest, Akashastha
Technologies made a cash offer to acquire equity shares of Tejas Networks at a price of Rs 258.In September end, Kotak Mahindra Capital
announced details of the open offer by Panatone Finvest to garner up to 40.25 m shares, or 26% stake
This was followed by the preferential allotment of 16.8% of Tejas Network shares to Panatone Finvest based on a shareholder agreement dated
29 July.Ever since it was announced that Tata group will acquire a controlling stake in Tejas Networks to help it access 5G technology, its
shares have been on a tear.Now that Tejas Networks has Tata group's backing and financial resources, it will expand its telecom
It will and design/manufacture the gamut of 4G and 5G wireless gear
This would help Tejas take on the likes of Ericsson, Nokia, and Huawei in tapping capital investments.With 5G technology just around the
corner, telecom companies including Tejas Networks have big plans to roll out 5G.No wonder why mutual funds and foreign investors with 5.2%
and 14.2% stake are bullish on the stock
Seasoned investor Vijay Kedia also holds about 2.3% stake.#2 Goldstone TechnologiesDecember 2021 shareholding data for Goldstone Tech shows
that promoters of the company substantially increased their stake by 35.1% in Oct-Dec period.Promoters now hold 53.9% stake in the company
Prior to this, promoters had a 18.8% stake.The company's board in October last year approved allotment of 15.8 m fully paid up equity
shares at an issue price of Rs 14.30, by preferential allotment.Incorporated in 1994 and based in Hyderabad, Goldstone Tech is promoted by L
It provides software development and management services.Commanding a penny stock status a year ago, the stock of Goldstone Tech is on a
From Rs 8 in January 2021, it currently trades at Rs 90
That's a massive up move of over 800%!The sharp rise is due to the good results it posted in the September 2021 quarter
The company's net profit saw an around 25-fold increase to Rs 18.2 m as against Rs 0.7 m in the previous quarter.Also, investors seem to
be betting on small IT service and technology solutions providers as the risk of Omicron still remains
Goldstone's peers - R Systems International, Palred Tech, and 3I Infotech have also performed well
IT companies tend to do well in this scenario, just like they were strong during the first and second wave of Covid.#3 JSW HoldingsPromoters
of JSW Holdings purchased around 537,451 shares of the company during the October-December 2021 quarter
In percentage terms, this accounted for a stake increase of 4.84%.The top three promoters are Siddeshwari Tradex (12.58 lakhs shares/11.3%),
Nalwa Sons Investments (11.37 lakhs shares/10.24%), and Vinamra Consultancy (10.83 lakhs shares/9.76%).In total, promoters hold 73.55 lakh
shares, or 66.3% stake out of which 13.49 lakh shares (18.34%) have been pledged.JSW Holdings is a core investment company, primarily
engaged in the business of investing and financing
It earns a majority of its revenue from interest on loans (53%) and dividend income (39%), followed by pledge fees (8%).Over the year gone
by, shares of the company have shown a muted performance.As the company's shares have shown muted performance this year, its promoters
might have been lured to buy stake
Do note that when a promoter buys more shares, investors get some relief and are assured of the long-term prospects of the company.#4 Best
AgrolifeBest Agrolife is a leading manufacturer of agrochemical products like insecticides, pesticides, herbicides, fungicides, and plant
It has a vast distribution network of more than 3,000+ distributors and directs dealers?with 14 stock points.The company has more than 60
products, 80 technical manufacturing licenses, around 360 formulations licenses, 30,000+ MPTA manufacturing formulation capacity, and 7,000+
MTPA integrated state-of-the-art technical plants.For the quarter under review, promoters of the company hiked their stake by 4.6%
The total promoter holding now stands at 45.4%.Interestingly, foreign investors also hold a significant 11.2% stake in the agrochemical
company.In the current fiscal, the company acquired group entity Best Crop Science
This acquisition will result in increased market share and better financials for fiscal 2022
It will also solve storage and logistic problems the company has been facing for some time now.Over the year gone by, Best Agrolife shares
have given multibagger returns of 110%.#5 VedantaPromoter holding in Vedanta has steadily increased over the past two years
In March 2020, Vedanta's promoters had 50.1% stake in the company
Today, the same figure has increased to almost 70%.In the December 2021 quarter, promoters hiked stake by 4.5%, bringing their total stake
to 69.7%.Twin Star Holdings and Vedanta Netherlands Investments BV purchased around 170 m shares at an offer price of Rs 350 per share
The total value of this purchase came to Rs 59.5 bn
This was funded through a combination of debt from Oaktree Capital, IDBI Bank, and Canara Bank.A big red flag for the company is that the
promoter pledging still remains at 99.99%.Holding companies of Vedanta raised about Rs 60 bn in the quarter by pledging shares
They pledged 2,422.6 m or 65.18% shareholding in Vedanta in three facility agreements to raise the money.While you may think the acquisition
is positive for Vedanta, several analysts have said otherwise
The latest stake acquisition will take Vedanta Resources' holding company debt to more than $10 billion, per our estimates'.Insider buying
has also raised other opinions
PolymersLast on our list, we have a specialty chemical company which has grown by leaps and bounds - Deep Polymers.Promoters of the company
increased their stake by 3.2% taking their total holding to 67.9% as of December 2021.Ramesh Bhimji Patel and Deep Additives Pvt Ltd are the
top two promoters holding 23.8% and 22% stake, respectively.Over the year gone by, shares of Deep Polymers have skyrocketed around 800%.This
week, the company's board recommended a bonus issue of equity shares
The board also approved rights issue.In which other companies did insiders increase stake?Apart from the above, here are a few more
companies where promoters increased their stake.Since you're interested in tracking promoter shareholding activity, check out Equitymaster's
Powerful Stock Screener.This tool keeps track of which company's promoters are increasing their stake
Here's a snapshot of the screen:Why high promoter holding is a big positiveThe level of promoters' shareholding is very important,
especially in India where many businesses are family owned.The shareholding level acts as an indicator about the confidence of the promoters
in the business as well as the strength of leadership control in the company.A company with a very high promoter shareholding often
represents a scenario where the promoters see a bright future for the company and in turn, they plan to benefit from its good growth.A
promoter has all the information about the company
If they are investing, it shows they're confident about the company's prospects.While promoter holding is an important parameter, it
should not be the sole reason for buying a stock.In rare cases, penny stock promoters can use misleading information about the actual
valuation of the company.Also, promoters pledge their shares to raise funds for either personal or company needs
High promoter pledging can lead to high volatility in the stock prices and as a result, it can turn out to be a major investment risk.Hence,
it's always better to check promoter pledging before making investment decisions.Happy investing!Disclaimer: This article is for
information purposes only
been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
