26 August 2011

India Strategy --Tracking Promoter Pledging: What’s at Stake?:: Morgan Stanley Research,

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India Strategy
Tracking Promoter Pledging:
What’s at Stake?
Quick Comment: As per the SEBI regulations initiated
in Mar-09, promoters/founders of companies are require
to disclose the amount of stock they have pledged.
The following are our observations on the last
disclosures made during the latest quarter:
What’s at Stake? During this quarter, 768 companies
have disclosed pledges on their holdings. As at the end
of Jun-11, the total value of pledged stocks was
US$33.4 bn versus US$37 bn in Mar-11. This pledged
value as a % of the market cap of stocks of these
companies has fallen to its lowest level since Mar-09 –
at 9.9% vs. 10.7% in the previous quarter. This pledged
value was about 2.2% of India’s market cap, lowest level
since Mar-09. Marked to market, at yesterday's prices,
the pledged value of shares was at US$27 bn vs. US$33
bn at the end of the Jun quarter without accounting for
any subsequent changes that may have happened to
the number of shares pledged.
During the quarter, at the sector level, Materials and
Healthcare saw an increase in the absolute pledged
value while the rest saw a fall with Industrials seeing the
most falls. In terms of share in total pledges to total
pledged (in value terms), Materials saw the biggest
increase in the share of pledges and Industrials saw the
biggest fall (see Exhibit 4).
Assuming 50% margin, the bank credit to these
promoters at US$16.2 billion is 2.0% of outstanding
bank credit.
As a percent of total pledges (in value terms), Consumer
discretionary followed by Utilities continue to have the
biggest pledging by promoters. While as a percent of
market cap, pledging is highest for Utilities. Materials
followed by Consumer discretionary have the most
widespread pledging by promoters.


Forty-six companies from our Morgan Stanley coverage
universe companies have reported pledges (totaling US$17.1
bn). Among Sensex constituents, ten companies have
reported pledges of US$7bn.
Out of the 768 companies that reported promoter pledging in
Jun-11, 79 have revoked their pledges on shares and are out of
the list. An additional 30 companies have reported promoter
pledging during the quarter.
Please note that certain sectors like Utilities have higher
promoter pledging due to the requirement of providing
collateral security to banks and financials institutions for
availing loans.


Exhibit 5
Top 50: Pledging in Value Terms
Shares Pledged
(in mn)
% Paid-up
Capital
Pledged value
(US$mn)
TCS 161 8% 4253
Adani Power 858 39% 2112
JP Power 1084 52% 1158
Tata Motors 38 7% 994
Asian Paints 14 14% 977
Tata Power 27 11% 783
United Spirits 32 25% 704
Suzlon Energy 633 36% 679
Videocon Industries 132 44% 636
Hero Motocorp 15 7% 622
Unitech 866 33% 619
Wockhardt 70 64% 575
Fortis Healthcare 150 37% 546
Essar Oil 183 13% 533
Pipavav Defence 298 45% 510
GMR Infra 644 17% 470
JSW Steel 24 11% 467
Sun TV 49 13% 384
JSW Energy 249 15% 372
Bhushan Steel 37 17% 360
Zee Entertainment 111 11% 335
Indiabulls Power 809 40% 326
D B Corp 63 34% 325
Era Infra Engg 85 47% 325
Dish TV 159 15% 312
Motherson Sumi 61 16% 306
Religare Enterprises 30 21% 303
Omaxe 105 60% 303
Parsvnath Developers 257 59% 272
IRB Infra 70 21% 272
Guj Pipavav Port 182 43% 264
Apollo Hospitals 24 20% 261
Ashok Leyland 237 18% 258
Guj NRE Coke* 219 38% 246
KF Airlines 263 53% 236
Lanco Infratech 430 18% 226
Tata Tele. Mah. 493 26% 212
JSW ISPAT 478 20% 205
United Breweries 17 7% 203
Tata Coffee 11 57% 203
Pantaloon Retail* 27 12% 200
Plethico Pharma 25 74% 196
Sh.Renuka Sugar 127 19% 190
M & M 12 2% 189
Ackruti City 43 59% 187
Shoppers Stop 15 18% 154
D B Realty 98 40% 153
Tata Global 70 11% 151
Max India 36 14% 149
Sintex Industries 36 13% 147
*Please note: Pantaloon Retail and Gujarat NRE Coke includes their respective DVRs



Exhibit 6
Top 50: Pledging As a % of paid-up Capital
Shares Pledged
(in mn)
Pledged value
(US$mn)
% Paid-up
Capital
Falcon Tyres 27 48 79%
Plethico Pharma 25 196 74%
Blue Blends Finance 5 1 72%
Satra Properties 110 22 68%
Dunlop India 47 45 65%
Wockhardt 70 575 64%
Saurashtra Cement 33 13 64%
Bodal Chemicals 61 40 61%
Omaxe 105 303 60%
Sadhana Nitro 6 2 60%
Ackruti City 43 187 59%
Parsvnath Developers 257 272 59%
Duncans Industries 31 10 58%
Tata Coffee 11 203 57%
Regaliaa Realty 2 0 56%
Euro Ceramics 9 5 54%
Shah Alloys 11 3 53%
Financial Eyes 2 2 53%
KF Airlines 263 236 53%
Vishnu Chemicals 6 12 52%
JP Power 1084 1158 52%
Trinetra Cement 2 1 51%
Entegra 55 29 51%
AGC Networks 7 27 51%
Sh. Krishna Paper 5 2 51%
Panyam Cement 8 11 51%
S.A.L Steel 43 7 51%
Arvind Products 41 6 50%
Gayatri Projects 6 28 50%
Advanta India 8 48 50%
Star Paper Mills 8 4 49%
Kashipur Sugar 8 1 49%
Bheema Cements 13 6 48%
Era Infra Engg. 85 325 47%
Dharamsi Morarji 10 3 46%
Shrenuj & Co. 35 45 46%
Spentex Inds. 38 11 46%
Guj. Carbon 6 0 46%
J K Cements 32 77 46%
Ansal Properties 72 68 45%
Tuticorin Alkali 7 2 45%
Pipavav Defence 298 510 45%
Karur KCP Pack. 5 4 45%
Regency Hospital 4 5 45%
Gati 38 53 44%
Ganesh Housing 14 44 44%
Crew B.O.S.Prod 6 12 44%
Videocon Industries 132 636 44%
Blu.Coast Hotel 4 16 43%
Vipul Ltd 52 14 43%
Source: Capitaline, Morgan Stanley Research






Exhibit 2
Sectorwise Trends in Pledging (# of companies)
MSCI Sectors Jun-10 Sep-10 Dec-10 Mar-11 Jun-11
Consumer Discretionary 205 207 205 203 196
Consumer Staples 74 77 80 75 65
Energy 8 8 9 9 8
Financials 66 69 72 72 66
Health Care 51 49 49 52 48
Industrials 88 90 102 99 90
Information Technology 64 61 64 64 54
Materials 198 213 211 215 213
Telecoms 12 13 14 14 14
Utilities 14 14 13 14 14
Total 780 801 819 817 768
Source: Capitaline, Morgan Stanley Research
Exhibit 3
Sectorwise Trends in Pledging (US$ mn)
MSCI Sectors Jun-10 Sep-10 Dec-10 Mar-11 Jun-11
Consumer Discretionary 4,355 5,132 4,746 6,232 5,509
Consumer Staples 2,468 2,807 3,036 2,417 2,352
Energy 960 971 978 843 736
Financials 3,765 4,531 3,849 3,056 2,615
Health Care 1,973 2,099 2,240 2,105 2,212
Industrials 5,516 6,883 7,022 6,428 4,944
Information Technology 4,159 5,208 6,365 5,920 4,773
Materials 3,744 4,379 4,306 4,103 4,535
Telecoms 477 554 477 510 446
Utilities 7,276 7,077 6,308 5,425 5,272
Total 34,694 39,642 39,329 37,039 33,392
Source: Capitaline, Morgan Stanley Research
Exhibit 4
Share as % of Total Pledged
MSCI Sectors Jun-10 Sep-10 Dec-10 Mar-11 Jun-11
Consumer Discretionary 12.6% 12.9% 12.1% 16.8% 16.5%
Consumer Staples 7.1% 7.1% 7.7% 6.5% 7.0%
Energy 2.8% 2.5% 2.5% 2.3% 2.2%
Financials 10.9% 11.4% 9.8% 8.2% 7.8%
Health Care 5.7% 5.3% 5.7% 5.7% 6.6%
Industrials 15.9% 17.4% 17.9% 17.3% 14.8%
Information Technology 12.0% 13.1% 16.2% 16.0% 14.3%
Materials 10.8% 11.0% 10.9% 11.1% 13.6%
Telecoms 1.4% 1.4% 1.2% 1.4% 1.3%
Utilities 21.0% 17.9% 16.0% 14.6% 15.8%
Total 11.5% 11.1% 10.9% 10.7% 9.9%
Source: Capitaline Morgan Stanley Research




TD Power Systems - IPO: Oversubscribed 2.92x; QIB 6.5x, HNI 0.38x, retail 0.38x

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TD POWER SYSTEMS LIMITED

Total Issue Size7562637
Total Bids Received22077250
Total Bids Received at Cut-off Price1028600
No. of times issue is subscribed2.92
Sr.No.CategoryNo.of shares offered/reservedNo. of shares bid forNo. of times of total meant for the category
1Qualified Institutional Buyers (QIBs)3129042203910006.52
1(a)Foreign Institutional Investors (FIIs)11646700
1(b)Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)1804450
1(c)Mutual Funds2725300
1(d)Others4214550
2Non Institutional Investors13300795026000.38
2(a)Corporates23400
2(b)Individuals (Other than RIIs)402600
2(c)Others76600
3Retail Individual Investors (RIIs)310351611836500.38
3(a)Cut Off1028600
3(b)Price Bids155050

Updated as on 26 Aug 2011 at 1730 hrs


SRS Limited IPO: Over subscribed 1.25x; QIB 0.75x. HNI 5.11x, retail 0.32x

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SRS Limited

Total Issue Size35000000
Total Bids Received43727200
Total Bids Received at Cut-off Price3641100
No. of times issue is subscribed1.25

Sr.No.CategoryNo.of shares offered/reservedNo. of shares bid forNo. of times of total meant for the category
1Qualified Institutional Buyers (QIBs)17500000130488000.75
1(a)Foreign Institutional Investors (FIIs)0
1(b)Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)12968000
1(c)Mutual Funds0
1(d)Others80800
2Non Institutional Investors5250000268140005.11
2(a)Corporates23610100
2(b)Individuals (Other than RIIs)2783600
2(c)Others420300
3Retail Individual Investors (RIIs)1225000038644000.32
3(a)Cut Off3641100
3(b)Price Bids223300

Updated as on 26 Aug 2011 at 1800 hrs

BSE, Bulk deals, 26/8/2011

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
26/8/2011530901ACILSANJAY AGARWALS5747530.70
26/8/2011511664BGIL FilmsKAILASH CHANDRAB479525.51
26/8/2011511664BGIL FilmsENAAM SECURITIESB500005.78
26/8/2011511664BGIL FilmsKAILASH CHANDRAS689525.76
26/8/2011511664BGIL FilmsENAAM SECURITIESS500005.51
26/8/2011511672Clarus FinanceJIGAR PRAFUL GHOGHARIS8968692.00
26/8/2011509130Dunlop IndiaWESTERN INDIA GARMENTS PVT LTDS50000013.15
26/8/2011530337Exelon InfraSHAISHIL TUSHARKUMAR JHAVERIB31156355.80
26/8/2011530337Exelon InfraSHARADBHAI RAMANBHAI JHAVERIB7800055.23
26/8/2011530337Exelon InfraKFIC INVESTMENT MANAGEMENT PRIVATE LIMITEDB17000055.88
26/8/2011530337Exelon InfraSHARADBHAI RAMANBHAI JHAVERIS7898655.18
26/8/2011530337Exelon InfraUMA CHANDRASHEKHAR IYERS10000055.50
26/8/2011530337Exelon InfraSHAISHIL TUSHARKUMAR JHAVERIS28043355.72
26/8/2011531055GFLFINBOAST COMMERCIAL (P) LTDB18000110.75
26/8/2011531055GFLFINFLORENCE DEALER PRIVATE LIMITEDB25000110.98
26/8/2011531055GFLFINRITESH MAHESHKUMAR SHAHS30000111.00
26/8/2011533506INVENTURENITIN BABAJI PALANDEB151816134.31
26/8/2011533506INVENTURESAAKSHI SHARES PVT LTDB197086135.71
26/8/2011533506INVENTUREALFA FISCAL SERVICES PVT LTDB178935133.36
26/8/2011533506INVENTURECROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB152585134.57
26/8/2011533506INVENTUREALFA FISCAL SERVICES PVT LTDS178935130.45
26/8/2011533506INVENTURESAAKSHI SHARES PVT LTDS172086129.78
26/8/2011533506INVENTURECROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS152525135.97
26/8/2011533506INVENTURENITIN BABAJI PALANDES151816131.92
26/8/2011530165Kanchan IntlPANKAJ J DAVEB1764344.05
26/8/2011530165Kanchan IntlDHARMENDRA HARILAL BHOJAKB1650041.62
26/8/2011530165Kanchan IntlPANKAJ J DAVES1764341.66
26/8/2011526015Kemrock IndsAXIS BANK LTDB300000516.30
26/8/2011526015Kemrock IndsTINDEL MARKETING LIMITEDS306000516.30
26/8/2011506128Krishna DeepNEHA ADVISORY SERVICES PV T LTDB20000109.72
26/8/2011523483Pacific IndsPRADEEP KUMAR MITTALB8798168.00
26/8/2011523483Pacific IndsEKTA MITTALS8798168.00
26/8/2011513403PM TelelinnksBHAVINI VIJAYKUMAR SHAHS7416950.48
26/8/2011531033Regal EntertSWAJAY FINANCE PVT LTDB2500011.23
26/8/2011533470Rushil DecorCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB125396128.74
26/8/2011533470Rushil DecorCHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDB81719130.08
26/8/2011533470Rushil DecorCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS125396128.92
26/8/2011533470Rushil DecorCHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDS81719129.99
26/8/2011517534SV ElectricalsPARIND SUSHIL PAREKHB125000017.67
26/8/2011517534SV ElectricalsHARIDARSHAN SALES PRIVATE LIMITEDS28343517.65
26/8/2011517534SV ElectricalsSHENTRACON TREXIM PRIVATE LIMITEDS16800017.60
26/8/2011517534SV ElectricalsKALINDI CLOTH MERCHANTS PRIVATE LIMITEDS11700017.61
26/8/2011517534SV ElectricalsJIGAR PRAFUL GHOGHARIS21075217.67
26/8/2011517534SV ElectricalsSANJUKTA VANIJYA PRIVATE LIMITEDS13500017.60
26/8/2011517534SV ElectricalsRUPAK TRADING PRIVATE LIMITEDS14500017.72
26/8/2011517534SV ElectricalsJALAN CEMENT WORKS LIMITEDS11671617.79
26/8/2011517534SV ElectricalsDARSHAN TRADELINK PRIVATE LIMITEDS11000017.66
26/8/2011517534SV ElectricalsSWIFT TIE UP PRIVATE LIMITEDS14000017.64
26/8/2011533540TREE HOUSEAMPLE HOTELS AND RESORTS PVT LTDB255128139.52
26/8/2011533540TREE HOUSEMARWADI SHARES AND FINANCE LIMITEDB191079141.73
26/8/2011533540TREE HOUSECROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB2626993140.91
26/8/2011533540TREE HOUSECHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDB1448339139.62
26/8/2011533540TREE HOUSEVISA CAPITAL PARTNERSB250000136.59
26/8/2011533540TREE HOUSER M SHARES TRADING PRIVATE LIMITEDB443595144.62
26/8/2011533540TREE HOUSEA K G SECURITIES AND CONSULTANCY LTDB1882185136.48
26/8/2011533540TREE HOUSEGKN SECURITIESB611296140.95
26/8/2011533540TREE HOUSEDHANLAXMI BANK LIMITEDS444954137.20
26/8/2011533540TREE HOUSEA K G SECURITIES AND CONSULTANCY LTDS1882185136.74
26/8/2011533540TREE HOUSEINVENTURE GROWTH & SECURITIES LTDS172872139.22
26/8/2011533540TREE HOUSECHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDS1414327140.93
26/8/2011533540TREE HOUSEAMPLE HOTELS AND RESORTS PVT LTDS255128139.44
26/8/2011533540TREE HOUSEMARWADI SHARES AND FINANCE LIMITEDS241079144.19
26/8/2011533540TREE HOUSEGKN SECURITIESS611496141.24
26/8/2011533540TREE HOUSECROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS2626993139.98
26/8/2011533540TREE HOUSER M SHARES TRADING PRIVATE LIMITEDS443595145.28
26/8/2011531574VAS InfraDIPAKKUMAR NYALCHAND KAKKADS10254765.43
26/8/2011533427VMS IndsPUNCTUAL VINTRADE PRIVATE LIMITEDB10218314.01
* B - Buy, S - Sell
** = Weighted Average Trade Price / Trade Price