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Promoters selling company shares, mainly due to strategic compulsions, hit the $10 billion mark in Calendar 2023, the highest level in six years. In fact, the promoter selling in 2023 so far is two times that of Calendar year 2022’s, a study by Kotak Institutional Equities based on bulk and block deal data suggests. Adani group companies such as Adani Green Energy Ltd, Adani Enterprises Ltd, Adani Power Ltd, Adani Ports & SEZ Ltd and Adani Energy Solutions Ltd accounted for 40 per cent of the total promoter selling in the NSE500 index, the brokerage suggested.
Kotak said that NSE500 promoters offloaded about Rs 87,000 crore worth of shares in 2023, which included a whopping Rs 37,000 crore worth share sale by promoters of Adani Group companies. This was almost 40 per cent of overall promoter selling in 2023, Kotak noted. Among Adani group companies, Adani Green Energy led the table, with promoter selling shares worth roughly Rs 11,200 crore, followed by Adani Enterprises (roughly Rs 9,600 crore), Adani Power (Rs 8,700 crore)Adani Ports (Rs 5,300 crore) and Adani Energy Solutions (Rs 1900 crore)
Kotak said it would attribute only a small portion of promoter sales to bullish stock market conditions. It said a large portion of the sales by promoters pertains to holding companies of promoters “raising cash to manage high purported debt in promoter holding companies (Adani Group companies, Vedanta).” Another meaningful portion, Kotak said, is due to the exit of one of the promoters from a company, such as in the case of HDFC Life and CIE India for strategic reasons (portfolio rationalisation).
“Automobiles and components, capital goods, electric utilities, IT services and transportation sectors have seen the bulk of the promoter selling so far this year, while insurance and IT services accounted for a large portion of promoter selling over 2018-23,” it noted.
Kotak said due to promoter sell-downs, promoter holding in the BSE200 index has fallen to 48.8 per cent in the June quarter from 50.3 per cent at the end of December quarter. In contrast, the combined holding of domestic investors increased 90 basis points to 23.5 per cent in the June quarter, the brokerage said.
“The holding of FPIs has increased by a modest 26 bps to 21.7% over the same period, while the holding of others (AIFs, PMS fall under this category) has increased 31 bps to 6%. The change in the ownership patterns of companies with large promoter and PE sell-downs is quite interesting.
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