Stocks With High Promoter Pledge In India: Have you ever considered that a company’s promoters own a stake in the company but are at risk of being sold without their consent? Founders have significant skin in the game but also serious risks if share prices drop. This highlights the precarious nature of high pledging, as market fluctuations and margin pressures could unwind promoters’ equity stakes and diminish their influence despite substantive initial investments.

These uncertainties hold back the investor’s confidence and build skepticism around it, despite the management being good. In this article, we will look at some of the companies with high promoter pledges in India.

Stocks With High Promoter Pledge In India

High promoter pledge holding has benefits like incentivizing long-term value creation, it also poses risks like leverage and governance concerns. Promoters with significant personal wealth invested are motivated to make prudent decisions that drive growth. Funds from pledged shares can also fuel expansion and innovation.

However, high pledging raises red flags about risks and negative market perception. Thorough due diligence is crucial as the advantages and disadvantages must be weighed carefully before making informed investment decisions regarding companies with substantial promoter pledges.

Note: If you want to learn Candlesticks and Chart Trading from Scratch, here’s the best book available on Amazon! Get the book now!

telegram channel

Stocks with High Promoter Pledge #1: IndusInd Bank

Stocks with High Promoter Pledge - IndusInd Bank

IndusInd Bank is part of the Hinduja Group, which is led by Srichand Hinduja and his brother Gopichand. The bank operates a vast network across India, comprising 2,903 ATMs and 2,631 branches. Additionally, it has representative offices located in Dubai, London, and Abu Dhabi.

Its range of services includes vehicle loans, personal loans, microfinance, corporate banking, credit cards, and loans tailored for small and medium-sized enterprises (SMEs). IndusInd Bank earned interest from Treasury (13.18%), Corporate or Wholesale Banking (26.41%), Retail Banking (60.23%), and other banking operations (0.17%) in FY23.

In the December 2023 quarter, promoters held 16.45% of the company’s stock. They had pledged 45.48% of the stake in the company. In a recent transcript, management acknowledged that higher-than-expected slippages were a miss this quarter, but that slippages should return to normal in Q4.

The primary focus remains on increasing retail loans and deposits, improving asset quality, and investing for future growth. The company’s net interest income stood at Rs. 17,592 crore as compared to Rs. 15,000 crore in FY22, an increase of 17.28%. Net profits stood at Rs. 7,444 crore in FY23 as compared to Rs. 4,805 crore in FY22, an increase of 54.92%.

ParticularsAmountParticularsAmount
CMP₹1,528.40Market Cap (Cr.)₹125,459.00
Stock P/E (TTM)15.06EPS (TTM)₹107.15
RoE (%)14.85%RoCE (%)%
Promoter Holdings (%)16.45%Promoter Pledged (%)45.48%
CASA Ratio40RoA (%) (TTM)1.82%
Price to Book Ratio (TTM)1.52Net Profit Margin (%)0.26%

Stocks with High Promoter Pledge #2: Vedanta

Vedanta logo

Vedanta, Led by Anil Agarwal, formerly known as Sesa Goa Pvt Ltd. Vedanta Limited, is a diverse natural resource company involved in mining minerals like zinc, lead, silver, aluminum, copper, and iron ore, and also in oil and gas exploration. It operates in India, South Africa, Namibia, Ireland, and Australia.

The company has five main business segments: oil and gas, aluminum, copper, iron ore, and power. Most of its revenue comes from the aluminum sector. As per the recent transcript, The oil and gas company recently proposed its initial field development plan for the OALP field named Jaya, which is expected to generate $750 million in annual EBITDA through various debottlenecking efforts.

Moreover, the company has devised a strategic capital expenditure strategy amounting to approximately $8.4 billion to stimulate growth across its various business segments. This investment is expected to augment revenue by $4 billion and EBITDA by $1 billion. 

From a financial standpoint, the net debt rose to Rs 62,493 crore in Q3 FY24, primarily attributed to capital expenditure and working capital requirements.

In FY23, Vedanta’s revenue comes from Zinc India (22.77%), Zinc International (3.58%), Oil & Gas (10.34%), Aluminium (36.03%), Copper (12.02%), Iron Ore (4.47%), Power (4.95%), and Others (6.35%). Vedanta’s promoter stake stood at 63.71% as on December 2023 quarter and had pledged 99.99% of it.

The company’s revenue from operations stood at Rs. 1,45,404 crore in FY23 compared to Rs. 1,31,192 crore in FY22, an increase of 10.83%. Net profits stood at Rs. 14,503 crore in FY23 as compared to Rs. 23,710 crore in FY22, an increase of 63.48%. The Net profit margins are impacted by high-interest costs.

ParticularsAmountParticularsAmount
CMP₹275.80Market Cap (Cr.)₹97,966.00
Stock P/E (TTM)24.07EPS (TTM)₹10.95
RoE (%)12.45%RoCE (%)23.42%
Promoter Holdings (%)63.71%Promoter Pledged (%)99.99%
Debt to Equity Ratio1.15Interest Coverage Ratio4.26
Current Ratio (TTM)0.98Net Profit Margin (%)9.85%

Also read..

Stocks with High Promoter Pledge #3: Aster DM Healthcare

Stocks with High Promoter Pledge -Aster DM Healthcare

Aster DM Healthcare, headquartered in India and founded in 1987, offers a wide range of healthcare solutions. The company operates across various segments of the healthcare industry, encompassing hospitals, clinics, and retail pharmacies. Serving patients across different economic segments, Aster DM Healthcare provides healthcare services in several GCC states under brands such as Aster, Medcare, and Access.

In the recent transcript released by the company, It has plans to expand India’s bed capacity from 4,800 currently to 6,600 by FY27, including 1,700 new beds. Focus on brownfield expansion in existing clusters and greenfield projects in Kerala. The asset-light O&M model is being evaluated.

Pharmacies and labs are being expanded across existing hospital clusters to provide an integrated healthcare ecosystem. The myAster app will be launched in India to boost non-hospital revenues. The promoters’ stake in Aster DM stood at 41.88% as of the December 2023 quarter. The promoter pledged 98.87% of the stake.

In FY23, Hospitals accounted for 56.94% of Aster’s revenue, Clinics for 19.89%, Retail Pharmacies for 22.90%, and Others for 0.24%. In FY23, GCC States accounted for 75% of revenue, with India accounting for the remaining 25%.

The company’s revenue from operations stood at Rs. 11,932.88 crore in FY23 compared to Rs. 10,253.28 crore in FY22, an increase of 16.38%. Net profits stood at Rs. 475.49 crore in FY23 as compared to Rs. 601.05 crore in FY22, a decrease of 20.89%. The decrease in net profit was due to increase in purchase of medicines & consumables and employee cost compared to revenue in FY23.

ParticularsAmountParticularsAmount
CMP₹458.60Market Cap (Cr.)₹22,043.00
Stock P/E (TTM)71.29EPS (TTM)₹6.19
RoE (%)7.07%RoCE (%)8.30%
Promoter Holdings (%)41.88%Promoter Pledged (%)98.87%
Debt to Equity Ratio1.26Interest Coverage Ratio2.37
Current Ratio (TTM)1.35Net Profit Margin (%)3.98%

Stocks with High Promoter Pledge #4: Medplus Health Services

Medplus Health Services logo

Medplus Health Services, Founded in 2006 by Gangadi Madhukar Reddy, MedPlus aimed to establish a trusted pharmacy retail brand, providing medicines and enhanced value to customers through technology-driven supply chain efficiencies. Mr. Gangadi, a doctor and entrepreneur, plays a pivotal role in guiding the company’s strategic growth. 

MedPlus operates over 4,230 stores in 600 cities across 10 states, with a workforce exceeding 22,000 full-time employees engaged in various business operations. Its activities encompass retail and wholesale sales, manufacturing, contract manufacturing of private label pharmaceuticals, wellness and FMCG products, import, distribution, and comprehensive diagnostic centres as of February 5th, 2024.

According to the most recent transcript, the total number of stores now stands at 4,233 across 10 states. Plan to add 600 gross new stores in FY2024. MedPlus-branded products have been launched in all states, and they are gaining popularity. Aim to get to a 20% private label share of pharma sales.

Medplus earns the majority of its revenue from retail (99.32%), with the remainder coming from domestic (0.67%), and it only operates in India. The promoter stake as of the December 2023 quarter was 40.45%, with 58.05% pledged. 

The company’s revenue from operations stood at Rs. 4,557.57 crore in FY23 compared to Rs. 3,779.27 crore in FY22, an increase of 20.59%. Net profits stood at Rs. 50.10 crore in FY23 as compared to Rs. 94.71 crore in FY22, a decrease of 47.09%. Employee costs have increased slightly when compared to revenue.

ParticularsAmountParticularsAmount
CMP₹693.30Market Cap (Cr.)₹8,204.42
Stock P/E (TTM)140.65EPS (TTM)₹4.88
RoE (%)3.83%RoCE (%)5.85%
Promoter Holdings (%)40.45%Promoter Pledged (%)58.05%
Debt to Equity Ratio0.59Interest Coverage Ratio1.57
Current Ratio (TTM)3.63Net Profit Margin (%)1.10%

Stocks with High Promoter Pledge #5: Thyrocare Technologies

Stocks with High Promoter Pledge -Thyrocare Technologies

Thyrocare Technologies, founded in 1996 by Dr. A. Velumani, is a diagnostics and research company with a Diagnostic Testing Services segment, the company conducts medical investigations into metabolic irregularities, thyroid disorders, diabetes, infertility, anemia, auto-immune conditions, and infectious diseases. 

The Diagnostic Testing Services division primarily contributes most of the company’s revenue. Furthermore, the company’s Imaging Services division manages a network of imaging centers focused on detecting and tracking cancer in its initial phases. Thyrocare Technologies Ltd depends heavily on revenue from its Diagnostic Testing Services segment.

According to a recent transcript, Thyrocare acquired Think Health to strengthen its insurance segment offerings by providing ECG and blood tests at home. This will provide an all-in-one solution for insurance partners. The capex for Q4FY24 is estimated at INR 5 crores. For FY25, capex is expected to be around INR 30 crores. 

Despite seasonal weakness in Q3, the EBITDA margin is expected to remain between 29 and 30%. Expects to cover up in Q4 to be within guided range for the full year. Tanzania’s lab setup is on track, with operations expected to begin in Q4 FY24. Following the stabilisation of operations in Tanzania, further expansion in Africa is planned.

In FY23, Thyrocare’s revenues were primarily derived from diagnostic testing services (91.37%), imaging services (7.63%), and the remaining 1% from other sources. As of December 2023, the promoter stake stood at 71.11%, and 100% of the stake is pledged.

The company’s revenue from operations stood at Rs. 526.67 crore in FY23 compared to Rs. 588.86 crore in FY22, a decrease of 10.56%. Net profits stood at Rs. 64.36 crore in FY23 compared to Rs. 176.14 crore in FY22, indicating a decrease of 63.46%. Net profit had a significant impact on the rise in material, employee, and manufacturing costs in FY23.

ParticularsAmountParticularsAmount
CMP₹667.15Market Cap (Cr.)₹3,262.41
Stock P/E (TTM)50.21EPS (TTM)₹12.27
RoE (%)13.36%RoCE (%)17.51%
Promoter Holdings (%)71.11%Promoter Pledged (%)100.00%
Debt to Equity Ratio0.04Interest Coverage Ratio19.34
Current Ratio (TTM)3.99Net Profit Margin (%)12.22%

List of some of High Promoter Pledge Stocks

Here we will look at some stocks with high promoter pledge.

Stock NameCMP (Rs.)Promoter Stake (%)Pledged (%)
IndusInd Bank₹1,528.4016.45%45.48%
Vedanta₹275.8063.71%99.99%
Aster DM Healthcare₹458.6041.88%98.87%
Medplus Health Services₹693.3040.45%58.05%
Thyrocare Technologies₹667.1571.11%100.00%
Forbes & Company₹1,308.0073.85%98.25%
Shipla Medicare₹428.9550.01%90.41%
Orient Green Power Company₹22.3529.42%93.16%
Patel Engineering₹68.9539.41%88.67%
Rattanindia Power₹9.8144.06%88.65%

Read more: Fundamental Analysis Of Carborundum Universal

Conclusion

As the article neared its conclusion, we looked into some companies with a high promoter pledge. When the pledge percentage is high, the promoter’s holdings become more important. Multiple factors can influence various aspects of a business, including managerial choices made by leadership as well as the level of financial investment contributed by the company’s promoters.

How much voting power does the promoter have over the company’s decisions matters. What are your thoughts on the company’s potential? Let us know your views in the comments section below.

Written by Santhosh

By utilizing the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


Start Your Stock Market Journey Today!

Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!