Looking at Q2FY25 shareholding data, some companies stand out with significant increases in public shareholding and foreign institutional investments (FIIs). More retail investors are actively participating in the market, marking a big shift in how Indians invest. The total number of demat accounts in India has surged to 18.2 crore as of November 2024 increasing by 34.8% YoY. This represents an addition of 31.7 lakh demat accounts in November.
Retail investors were net buyers in the Indian equity market, even during the market correction in October and November. A report by Motilal Oswal says that India is set to grow strongly in the next decade, driven by favourable demographics and rising income. “Over the next decade, the demographic dividend will accelerate,” the analysts wrote, “with over 100 million people joining the workforce and about 100 mn households entering the middle-income class.”
In this chart of the week, we analyze companies where public shareholding has increased or decreased the most over the past quarter and examine the reasons behind these changes.
Retail investors and FIIs have been favouring stocks from the banking and finance sector. In this sector, retail investors have increased their stakes in companies like RBL Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank, and Angel One. Meanwhile, FIIs have raised their holdings in stocks such as Indian Energy Exchange, Nuvama Wealth, and PNB Housing Finance.
Outside banking, sectors like cement & construction and software & services have seen a rise in public shareholding. Retail investors have reduced their stakes in FMCG, media, realty, and general industries.
RBL Bank & GMR Airports see public shareholding jump in Q2FY25
RBL Bank (RBL) witnessed a 7.5 percentage points QoQ increase in public shareholding by retail investors during the second quarter as Foreign Portfolio Investors (FPIs) reduced their stake to 13.6% from 27.1% in June. The bank reported a 19.9% YoY growth in revenue in Q2FY25, with net interest income rising by 9% YoY and deposits by 20% YoY.
The cement & construction company, GMR Airports saw a 5.5 percentage points QoQ increase in its public shareholding. FPIs have reduced their stake in the company by more than 10 percentage points.
Ujjivan Small Finance Bank (SFB) saw a 4.9 percentage points QoQ increase in public shareholding during the past quarter, bringing total public holding to nearly 73%. FPIs sold 2.3 percentage points stake while mutual funds and insurance companies sold marginal stakes. In Q2FY25, the bank reported a 15.2% YoY revenue growth, with deposits increasing by 17% and the CASA ratio improving 26% to 25.9%. On November 27, Ujjivan SFB announced the sale of a stressed loan portfolio, including written-off loans worth Rs 270.4 crore (as of September 30, 2024). The sale reflects a positive move as it reduces the burden of non-performing assets, improving financial stability.
Equitas Small Finance Bank and Angel One also witnessed a nearly 4.5 percentage point QoQ increase in public shareholding. In case of Equitas, mutual funds like Franklin India, Nippon life india, Invesco india and Dsp Mutual Fund have reduced their stake marginally. Similarly, in Angel One, Nippon Life India trustee growth fund, Motilal Oswal Large and Midcap Fund and FPIs have reduced their stakes.
Public shareholding moves in contrast with FII holdings
The screener reveals another interesting trend - an increase in public shareholding often coincided with a decrease in FII stakes, and vice versa, in Q2FY25. Sterling and Wilson is the only company where public shareholding, DII, and FII holdings all increased in the past quarter as the promoter holdings reduced by over 7 percentage points. The company posted a 113% YoY net profit growth, and a 37% YoY revenue growth in Q2FY25.
In the banking and finance sector, public shareholding decreased in Indian Energy Exchange, Nuvama Wealth, and PNB Housing Finance, while FII holdings rose. Nuvama Wealth saw a 6.7 percentage point QoQ drop in public shareholding, offset by a 7.1 percentage point QoQ rise in FII holdings. The company's promoter group (Pagac Ecstasy) marginally reduced its stake by 0.5 percentage points, while funds like Smallcap World and Morgan Stanley increased their holdings. This shift likely reflects institutional confidence in the company’s growth prospects.
PNB Housing Finance also saw a 13.7 percentage points QoQ decrease in public shareholding, while the FIIs increased their stakes by 4.3 percentage points over the past quarter. The Government of Singapore and the Monetary Authority of Singapore increased their stake by 5 percentage points and 1.3 percentage points respectively while Asia Opportunities v reduced its stake by 3.7 percentage points. Mutual funds like HSBC Small Cap fund, Nippon India Small Cap Fund, Aditya Birla Sun Life PSU equity fund and Hdfc Large and Mid cap fund have also increased their stake along with the FIIs.
Honasa Consumer, a personal products company, witnessed a 5.4 percentage point QoQ decline in public shareholding during the past quarter. At the same time, FPIs increased their stake significantly by over 5 percentage points. Mutual funds also raised their holdings, marginally, by 0.3 percentage points.
