Listed Companies with Zero Promoter Holding Sep2022
(An update dated 21May2023 on this topic is available)
On average, a little more than 50 percent of the equity shareholding in Indian listed stocks is held by promoters. However, only a handful of listed companies, out of more than 4,000 listed companies, in India have zero promoter holding.
The following list provides a glimpse of such companies in the order of their market capitalisation >
At the top of the list by market cap are companies, like, ICICI Bank, HDFC Limited (which is in the process of getting merged with HDFC Bank Ltd), ITC, L&T and new-age company Zomato. At the other end are companies, like, Equitas Holding, Cartrade Tech and Care Ratings.
You may have noticed that private banks and other financial services companies dominate the above list. Other stocks include stock / energy exchanges, platform companies and those relating to new-age companies listed in the past one year or so.
Technically, some firms may have zero promoter holding -- but, a set of people may hold firm control over the company practically.
It is often argued firms with managements having high promoter stake (that is, with substantial skin in the game or family-owned businesses) will do better than firms that are run by managements with no significant shareholding.
It's generally believed that a high promoter holding gives strong incentives for the owners / managers to create and sustainably generate long term value for minority shareholders.
Professional managers might be tempted to work for themselves and in the process their actions may be detrimental to the long-term interests of the owners (which is known as principal-agent problem in corporate lexicon).
Let us see, on a three- to five-year perspective, how the firms with no promoter holding will stack up against companies managed by promoters / owners.
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P.S. 2 dated 21May2023: Equitas Holdings Ltd was wrongly included in the list of zero promoter holding. In fact, the company as on 30Sep2022, had a promoter 26.14 percent.
P.S. 1: There
are certain companies with large promoter holding, but which are run by
professional managers -- for example, Asian Paints, Marico Ltd,
HCL Technologies, Pidilite Industries and others. In general, the promoters of these
companies do not interfere in the day-to-day operations of the company. Such companies are in a completely different league.
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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