The Minimum Public Shareholding Rule is applicable to all listed companies in India. As per the rule, 25 percent of the outstanding equity shares of a company must compulsorily be held by the public. Here, ‘public’ is defined as non-promoters.
This rule was brought in to reduce promoter domination and stock markets are widely held and are liquid. Moreover, it gives institutional investors a greater say in a company’s affairs. The Securities and Exchange Board of India imposes penalties on companies that are non-compliant by freezing the shares of the promoters and barring them from directorship.
Here are a few companies that have a promoter shareholding of more than 75 percent, hence a public shareholding of less than 25 percent. These companies might soon come up with an offer for sale (OFS) or a qualified institutional placement (QIP) to reduce their shareholding, in line with regulatory requirements.
Patanjali Foods
The erstwhile Ruchi Soya Industries was acquired by Patanjali Foods in September 2019 through a corporate insolvency resolution process. It is engaged in the business of processing oil seeds and refining oil for edible use.
It is a mid-cap stock with a market capitalization of ₹ 43,336 crores and its shares were trading at ₹ 1215 apiece on Monday. The company’s promoters had a 98.90 percent stake in it, as of the March quarter of FY22. However, the promoters reduced their stake to 80.82 percent. They will have to further reduce their stake in the company.
In the past year, the company’s share price increased by 12.86 percent. Its revenue increased by 30.24 percent to ₹ 31,525 crores in FY23, as compared to ₹ 24,205 crores in FY22. its net profit increased by 9.94 percent to ₹ 886.44 crores in FY 23, as compared to ₹ 806.31 crores in FY22.
Shyam Metalics & Energy:
Shyam Metalics is a leading integrated metal-producing company with a focus on long steel products and ferroalloys. It is a small-cap stock with a market capitalization of ₹ 9,015 crores and its shares were trading at ₹ 358 apiece on Monday. The company’s promoters hold an 88.35 percent stake in it and might have to reduce their stake soon.
In the past year, the company’s share price increased by 18.17 percent. Its revenue increased by 21.32 percent to ₹ 12,610 crores in FY23, as compared to ₹ 10,394 crores in FY22. Its net profit increased by 101.14 percent to ₹ 1,725.00 crores in FY23, as compared to ₹ 857.60 crores in FY22.
Vedant Fashions:
Vedant Fashions Limited caters to the Indian celebration wear market with a diverse portfolio of brands like Manyavar, Mohey, Manthan, Twamev and so on. It is a mid-cap stock with a
market capitalization of ₹ 29,283 crores and its shares were trading at ₹ 1235 apiece on Monday. The company’s promoters hold an 84.88 percent stake in it and might have to reduce their stake soon.
In the past year, the company’s share price increased by 12.86 percent. Its revenue increased by 30.16 percent to ₹ 1,355 crores in FY23, as compared to ₹ 1,041 crores in FY22. Its net profit increased by 36.26 percent to ₹ 429.11 crores in FY 23, as compared to ₹ 314.91 crores in FY22.
Written by Simran Bafna
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