Promoters: Promoters of some mid- and small-cap companies hike stakes in a sign of confidence

Mumbai: Promoters are usually known to buy shares in their companies when the market cycle is in a downturn but this time they are not waiting for a bear phase to up their stakes. As the stock market extended its record-breaking run, about two dozen companies – mid-cap and small-cap companies – have witnessed an uptick in promoter holdings during the December quarter.

During the quarter, promoters of companies such as Tide Water Oil, Capacit’e Infra, Shalimar Paints, KPI Green Energy, Snowman Logistics, Apollo Micro Systems, Paisalo Digital, and Hi-Tech Pipes, among others, have increased their stakes.

According to analysts, share purchases by promoters enhance investor confidence.

“It strengthens conviction as the promoter holds a positive outlook on the company and its business prospects,” said Vinod Nair, head of research at Geojit Financial Services. “Moreover, it may indicate that the promoter is considering the stock’s price undervalued in the market compared to future growth.”

Securities and Exchange Board of India regulations permit promoters to purchase up to 5% stake in their companies in any financial year from the secondary market through the creeping acquisition route.

In the December quarter, promoters of Tide Water Oil, a prominent manufacturer and marketer of lubricants, raised their stake from 57.28% to 62.27%. The stock witnessed a 16% rally during the same period. The promoter holding of EPC player Capacite Infra increased by 2.6% in the December quarter. Its stock price gained 21% in the period. Similarly, KPI Green Energy saw a rise in promoter holding by 1.82%.

According to Nair, a company with a significant promoter holding is often seen as a good investment prospect.The Nifty index rallied nearly 11% in the December quarter, while Nifty Midcap 100 and Nifty Smallcap 100 surged 14% and 18%, respectively, during this period after foreign portfolio investors bought shares worth ₹62,424 crore.