Even as India Inc’s shareholder base shrunk amid concentration of large holdings in hands of big investors like promoters, foreign institutional investors (FIIs) and high net worth investors (HNIs), those of numerous blue-chip companies led by Reliance group saw a fall in shareholders, particularly in the retail category.
Brokers said unlike in the past, small investors have been adopting a smart strategy of booking gains in the rising market leading to a diversion of a substantial part of their holdings to long-term players like FIIs who remained on a buying spree during the Sensex’s breathtaking journey to 20-k level this week.
The list of companies that saw shareholder base fall included Reliance group (both Mukesh and Anil Ambani owned) heavyweights like Reliance Industries (RIL), Reliance Petroleum (RPL), Reliance Capital (RCL), Reliance Energy (REL) and many other leading companies from private and public sectors.
“Retail investors have become market savvy and have been booking profits on rises. Many of the past IPOs have witnessed such a trend. The fall in the shareholder base may be temporary as investors would start making a comeback when there is some correction in the market,” said ICICI Direct head of research Harendra Kumar.
RIL and RPL have witnessed a fall in public shareholding of 67,482 and 71,827, respectively, over the past one year (from September 30, ‘06 to September 30, ‘07). This is despite any change in their equity capital which remained at 139.35 crore shares and at 450-crore shares respectively. The number of FII shareholders, however, rose significantly by 224 and 35, respectively, during the period.
FIIs have raised their holdings in RIL marginally from 20.3% to 20.6% while trimming their stake in RPL from 2.6% to 2.3%, according to the latest shareholding patterns of the two companies filed with BSE. The fall in public shareholders has been relatively steep in case of Anil Ambani-owned RCL and REL. Their loss was 1,49,409 and 1,43,732 shareholders, respectively.
JSW Steel, Aptech, Sail, Patel Engineering, Andhra Bank, GVK Power and MRPL are a few other notable examples of this phenomenon. The fall in public shareholding was between 54,879 and 86,482 in these companies.
There has been a significant change in shareholder pattern of India Inc, with an increasing number of global investors, including FIIs and private equity investors, buying a sizeable stake in companies across sectors.
“A large number of shares have changed hands from retail to institutional investors during the bull run. The fall in the number of shareholders has also been because promoters themselves are in favour of making shareholding as diversified as possible once their companies get publicly listed,” said Prime Database MD Prithvi Haldea.
However, there are many such companies where the number of retail shareholders have risen . The list includes ICICI Bank, Infosys Tech, Unitech, Hindalco and TCS.