Promoter ownership in India's top 500 companies hits record low of 49.5%

Synopsis

Promoter ownership in India's top 500 companies has declined to a record low of 49.5% in the March quarter, driven by high valuations and strong investor demand prompting stake sales. Non-banking finance, telecom, and public sector banks experienced the most significant drops in promoter holdings.

Mumbai: Promoter ownership in India's top 500 companies fell to an all-time low of 49.5% in the March quarter as rich share valuations and strong investor appetite prompted several founders to sell a portion of their stakes in the past year. Non-banking finance companies, telecom, electronic manufacturing services (EMS) companies and public sector banks saw the biggest decline in promoter stakes in the fourth quarter from the previous one, according to Motilal Oswal Financial Services.

Shareholding of promoters fell by 30 basis points (0.3%) from 49.8% in the December quarter and by 140 basis points (1.4%) from 50.9% in the same period last year.

"The activity in the primary market was so robust that promoters took advantage of the high valuations to sell their stakes through QIPs (Qualified Institutional Placements) and other routes," said Deven Mistry, head - Quant Research - Institutional Equities, Motilal Oswal Financial Services.

Agencies

Promoters have held the highest stakes in Indian companies in the past two decades, followed by foreigners and domestic institutions such as mutual funds and insurers. While their holdings in the top 500 companies have consistently stayed above 50% of the total equity, they first fell below the halfway mark in July-September 2023.

In 2015, promoters held 52.1% in the country's top companies, while foreign portfolio investors owned 22.8% and domestic institutions held 10.8%. Circa 2025, domestic institutions' ownership has shot up to 19.2%, while the stakes of promoters and FPIs have dropped to 49.5% and 18.8%, respectively.

Domestic institutions have been growing in dominance in the past five years, driven by unprecedented inflows into equity mutual funds and pension funds, thanks to retail investors' voracious appetite for stocks. In the March quarter, these funds surpassed foreign portfolio investors in ownership of companies for the first time in more than 22 years.

Promoters of companies in technology, NBFCs, Oil and Gas, consumer and automobiles were the most dominant in the Nifty 500 index, accounting for 42% of the total holding in the March quarter.

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