When the market had a lot of volatility in the December quarter of 2021, many stocks had a pretty good correction.
When a company’s promoters raise their shares, there are plenty of people curious to know why it happens.
While promoters can have hundreds of reasons to sell, they often have only one compelling reason to buy. The market thinks the promoters know something it doesn’t.
When the market was volatile in the October-December quarter of 2021, many stocks had a pretty good correction. Seizing the opportunity presented by the correction, the promoters increased their deposit.
The same is not true in the US. Promoters of US-based companies are reducing their holdings amid soaring market valuations.
Let’s take a look at six companies in which promoters increased their stakes last quarter.
#1 Tejas Network
From a zero stake holder since listing in 2017, Tejas Networks has become a boosted equity holder in Q12 2021.
The December 2021 stake data shows that the promotion team holds a 37.3% stake in Tejas Networks.
This happened when Tata Group announced its plan to buy back shares of the domestic telecommunications equipment company. With this, Tata Corporation acquired a controlling stake in Tejas Networks.
Tata Sons and its subsidiaries Panatone Finvest, Akashastha Technologies have made a cash offer to buy back the shares of Tejas Networks at a price of Rs 258.
At the end of September, Kotak Mahindra Capital announced details of the open offering of Panatone Finvest to raise 40.25 million shares, or 26% of the shares. This was followed by the preferential allocation of 16.8% shares of Tejas Network to Panatone Finvest based on the July 29 shareholder agreement.
Since it was announced that the Tata team will acquire a controlling stake in Tejas Networks to help it access 5G . Technology, its stock has been a tear.
Now that Tejas Networks has the backing and financial resources of Tata Corporation, it will expand its telecommunications product portfolio. It will and design/mass produce 4G and 5G wireless devices. This will help Tejas go head-to-head with Ericsson, Nokia and Huawei in tapping capital investments.
With 5G technology coming soon, telecom companies including Tejas Networks have big plans to roll out 5G.
No wonder why mutual funds and foreign investors with 5.2% and 14.2% shares are bullish on this stock. Seasoned investor Vijay Kedia also holds about 2.3% of the shares.
#2 Goldstone Technology
Goldstone Tech’s December 2021 stake data shows that company promoters significantly increased their stakes by 35.1% in the October-December period.
The promoters currently hold 53.9% of the company’s shares. Before that, the promoters had an 18.8% stake.
The company’s board of directors in October last year approved the allocation of 15.8 million shares that have paid off all equity at an issue price of Rs 14.30, under the preferential allocation method.
Founded in 1994 and headquartered in Hyderabad, Goldstone Tech is developed by LP Sashikumar. It provides software development and management services.
Commanding the stock status a cent a year ago, Goldstone Tech’s stock is on the upswing. From Rs 8 in January 2021, it currently trades at Rs 90. That’s an 800% bigger gain!
This strong increase is due to good results announced in the September quarter of 2021. The company’s net profit increased about 25 times to Rs 18.2 million from Rs 0.7 million in the previous quarter.
In addition, investors appear to be betting on small IT service and technology solution providers as Omicron’s risk remains. Goldstone’s peers – R Systems International, Palred Tech and 3I Infotech also performed well. IT companies tend to do well in this scenario, just as they were strong during the first and second Covid waves.
#3 JSW Holdings
JSW Holdings promoters purchased approximately 537,451 shares of the company during the October-December 2021 quarter. As a percentage, this accounts for a share increase of 4.84%.
The top three advertising agencies are Siddeshwari Tradex (12.58 thousand shares / 11.3%), Nalwa Sons Investments (11.37 thousand shares / 10.24%) and Vinamra Consultancy (10.83 thousand shares / 10.24%) / 9.76%.
In total, the promoters hold 73.55 thousand shares, or 66.3% of the shares, of which 13.49 thousand shares (18.34%) have been pledged.
JSW Holdings is a core investment company primarily engaged in the investment and financing business. It earns most of its revenue from loan interest (53%) and dividend income (39%), followed by mortgage fees (8%).
Over the past year or so, the company’s stock has shown an underwhelming performance.
Since the company’s stock has shown volatile performance this year, its promoters may have been lured to buy shares. Be aware that when a promoter buys more shares, investors are relieved and reassured about the company’s long-term prospects.
#4 Best Farm Life
Best Agrolife is a leading manufacturer of agrochemical products such as insecticides, insecticides, herbicides, fungicides and phytonutrients. It has an extensive distribution network with more than 3,000+ distributors and direct dealers with 14 warehouse points.
The company has more than 60 products, 80 technical production licenses, about 360 dispensing licenses, more than 30,000 MPTA production capacity and more than 7,000 MTPA-integrated modern engineering plants.
During the quarter under review, company promoters increased their shares by 4.6%. The total number of shares currently held is 45.4%.
Interestingly, foreign investors also hold a significant 11.2% stake in the agrochemical company.
In the current fiscal year, the company acquired the organization Best Crop Science. This acquisition will help increase market share and improve finances for fiscal 2022. It will also solve the storage and logistics issues the company has been facing for some time.
Over the course of a year, Best Agrolife stock has yielded a multibagger return of 110%.
# 5 Vedanta
Ownership of shares in Vedanta has increased steadily over the past two years. In March 2020, Vedanta promoters had a 50.1% stake in the company. Today, that same number has grown to almost 70%.
In the December 2021 quarter, promoters increased their shares by 4.5%, bringing their total shares to 69.7%.
Twin Star Holdings and Vedanta Dutch Investments BV purchased about 170 million shares at an offer price of Rs 350 per share. The total value of this purchase amounts to Rs 59.5 billion. The money was financed through a combination of debt from Oaktree Capital, IDBI Bank and Canara Bank.
A big red flag for the company is the advertiser commitment remains at 99.99%.
Vedanta’s parent companies raised around Rs 60 billion in the quarter by pledging shares. They pledged to hold 2,422.6 million or 65.18% stake in Vedanta in three agreements on facilities to raise money.
While you might think the acquisition is positive for Vedanta, some analysts have said otherwise. They say the debt is likely to grow.
This is Nomura,
‘The cost of comfort is a big debt plus the high cost. By our estimation, the latest share acquisition will bring parent company Vedanta Resources’ debt to more than $10 billion.
The insider purchase has also sparked other comments. Many argue that all of this will lead to Vedanta being delisted.
For more see Vedanta .’s newest equity model.
#6 Deep Polymer
Last on our list we have a specialty chemicals company that has grown by leaps and bounds – Deep Polymers.
The company’s promoters increased their stake by 3.2%, bringing their total holdings to 67.9% in December 2021.
Ramesh Bhimji Patel and Deep Additive Pvt Ltd are the two top advertisers holding 23.8% and 22% shares respectively.
In the past year, Deep Polymer’s stock has skyrocketed about 800%.
This week, the company’s board of directors recommended issuing bonus shares. The Board of Directors also approved the issue of rights.
In what other companies have insiders raised stakes?
In addition to the above, here are some other companies whose promoters have increased their shares.
Since you’re interested in tracking advertiser equity activity, check out Equitymaster’s powerful stock screener.
This tool keeps track of which company’s promoters are increasing their stakes. Here is a screenshot of the screen:
Why high advertiser holdings are a big positive
The extent of shareholding by promoters is important, especially in India, where many businesses are family owned.
The stake level serves as an indicator of the promoters’ confidence in the business as well as the strength of leadership control within the company.
A company with a very high percentage of promoter equity typically represents a scenario in which promoters see a bright future for the company and, in turn, plan to profit. from the good growth of the company.
The promoter has all the information about the company. If they are investing, it shows they are confident about the company’s prospects.
While advertiser holdings are an important metric, it’s not the only reason to buy stock.
In rare cases, penny stock promoters may use misleading information about the actual value of the company.
In addition, promoters pledge their shares to raise funds for personal or corporate needs. High investor commitment can lead to high volatility in stock prices and as such, it can become a major investment risk.
Therefore, it is better to check the advertiser’s commitment before making an investment decision.
Happy investing!
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.
(This article is provided from Equitymaster.com)
(This story has not been edited by NDTV staff and was automatically generated from the feed provided.)
