Promoter’s holding is one of the most important factors that is considered while analyzing stocks. It is the percentage of shares held by the promoters, who are usually the company’s founders. The promoters often have the best view of how a company is running.
An increase in their holding indicates that they see the business doing well and the stock price rising. On the contrary, a decrease in their holdings suggests that they see the stock price falling. While this can be alarming, it is important to understand why they sold their stake. There can be other reasons, apart from the share price. Sometimes professional promoters sell their shares to cash out their current investment and focus on the next.
Here are a few companies in which promoters have recently increased their stake:
Infosys Ltd.
The IT major recently came up with a buyback. As a result, its promoter’s stake/ holdings increased from 13.11% in the June quarter to 15.16% in the September quarter. On October 13, 2022, it informed the exchanges that its board had approved a buyback of its shares. The shares were bought back at a price not exceeding ₹ 1850 apiece, and the aggregate amount involved was up to ₹ 9,300 crores.
The company has a market capitalization of ₹ 6,83,728 crores and is a large-cap company. It has a good return on equity of 29.15% and a dividend yield of 1.99%. Its shares closed at ₹ 1635.65 apiece on the National Stock Exchange (NSE). They were trading at a price-to-equity (P/E) ratio of 29.92, which is almost at par with the industry P/E of 29.04.
Bajaj Auto Ltd.
The auto company’s promoters increased their holdings from 53.77% in the June quarter to 54.84% in the September quarter. The company on October 10, 2022, said that it bought back over 64 lakh shares from public shareholders for ₹ 2499.97 crores in its share buyback exercise.
The company has a market capitalization of ₹ 1,02,435 crores and is a large-cap company. It has an ideal return on equity of 21.58% and a dividend yield of 1.99%. Its shares closed at ₹ 3640.25 apiece on the National Stock Exchange (NSE). They were trading at a price-to-equity (P/E) ratio of 17.87, which is higher than the industry P/E of 13.30, indicating that the stock might be overvalued.
Written by Simran Bafna
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
