For the average investor, big changes in a company’s promoter holdings  offer crucial signals. When promoters buy shares, it can indicate their confidence in the business, a positive sign for other investors.

But a promoter's sale of shares is not an automatic red flag—it can be due to many reasons, such as realizing profits, regulatory compliance or tax planning. 

In this edition of Chart of the Week, we analyze the top five companies from the Nifty 500 that have seen the biggest QoQ changes in promoter holdings. We will assess two screeners: one for the highest QoQ rises and the other for the highest QoQ falls in promoter holdings over the past quarter. 

Adani group companies see high promoter buying in Q2

We begin with companies where promoters already holding a substantial company stake, have further increased their holdings. Bombay Burmah Trading Corp (BBTC), Adani Enterprises and Adani Energy Solutions stand out here, with promoter holdings increasing by 8.1 percentage points, 500 basis points and 490 basis points to 74.1%, 72.6% and 73.2% respectively in the past quarter. 

BBTC’s stakes were bought by Wallace Brothers Trading & Industrial (8.1%). However, on September 12,  India Ratings, an affiliate of Fitch, downgraded BBTC to India A+ from India AA due to its 33% stake in GoAir, which raised concerns. 

Adani Enterprises' holdings were acquired by promoter Kempas Trade and Investments (2.8%) in the previous quarter, while Adani Energy Solutions' shares were taken up by Gelt Bery Trade and Investment (4.9%) during the same period. These transactions occurred amid allegations of "opaque investments" against Adani, with reports suggesting that the group funneled millions of dollars into publicly traded stocks of its group companies through offshore structures. 

Turning to companies with relatively lower promoter holdings that have seen an uptick in the past quarter, we have Rallis India and Piramal Enterprises. Their promoter holdings rose by 500 basis points and 270 basis points, respectively, to 55.1% and 46.2%. On July 18, Tata Chemicals acquired a 5% stake in Rallis India to strengthen its position in the company. 

Meanwhile, Piramal Enterprises’ promoters, V3 Designs (0.3%) and PRL Realtors (0.2%), picked up stakes in the company during the same quarter.

MFs and FIIs compensate for high promoter selling

We now focus on firms with significant promoter holdings that have seen a sell-off by promoters in the past quarter. This includes Shyam Metalics and Energy, Patanjali Foods and Sheela Foam, where promoters reduced their holdings by 6.7 percentage points, 7 percentage points, and 7.5 percentage points respectively, leading to adjusted promoter stakes of 81.6%, 73.8%, and 65.5%.

Shyam Metalics and Energy's promoters, Narantak Dealcomm and Shubham Buildwell, sold a 5.1% stake through an offer for sale on September 11 to comply with SEBI's minimum public shareholding norms. Domestic institutional investor (DII) Tata AIA Life Insurance Company offset the divestment by purchasing a 1.3% stake. 

Patanjali Foods' majority promoter, Patanjali Ayurved, divested 7% of its stake in the company through a Rs 2,533.9 crore offer for sale on July 14. This offering attracted the FPI, GQG partners, which acquired 2% of the company's stake for its Emerging Markets funds, along with a 1.3% purchase by other investors. 

Sheela Foam's Q2 promoter divestment included CEO Tushaar Gautam (3.6%), and Rangoli Resorts (1.4%). These sales were offset by purchases by mutual funds (MFs) such as SBI Small Cap Fund (0.4%), Nippon Life India Trustee (1.8%), Kotak Funds (2.5%), and the insurance company SBI Life Insurance (1.8%).

Now, let's shift our focus to companies where already low promoter holdings have been pared down further. GMM Pfaudler and Restaurant Brands Asia stand out here, with promoters divesting 13.6 percentage points and 25.4 percentage points, respectively, in the last quarter. Consequently, their ownership has dwindled to 25.2% and 15.4%, respectively. Promoter Pfaudler sold a 13.6% stake in GMM Pfaudler on August 18, of which 9.9% was acquired by private equity (PE) investor Chrys Capital, while the remaining shares were purchased by Canara Robeco Mutual Fund (1.5%). Additionally, foreign portfolio investors (FPIs) like Taiyo Greater India Fund (0.4%) and First Sentier Investors (1.3%) bought stakes in the company.

Restaurant Brands Asia's promoter, QSR Asia, divested 25.4% of its holdings in the last quarter, making it the highest promoter sell-off QoQ in the Nifty 500. This divestment was purchased by mutual funds (MFs) such as Quant Small Cap Fund (2.8%) and Tata Mutual Fund (2.8%). FPIs alo participated, with Goldman Sachs Funds (1.2%) and Franklin Templeton Investment Funds (1%), and the insurance company ICICI Prudential Life Insurance (6.9%) acquiring shares.