Indian promoters raise stakes in auto firms as equities crash

Photo: Mint

Promoters of automobile and auto ancillary companies such as Hero MotoCorp Ltd, Bajaj Auto Ltd, and Tata Motors Ltd have stepped up open market purchases of equity shares and other financial instruments in the past few weeks.

This follows one of the steepest declines in the BSE auto index. The index has lost 42.76% since 1 January.

On 31 March, members of the promoter group of Hero MotoCorp bought 276,000 shares in the open market for 44 crore, increasing the promoter shareholding from 34.63% to 34.77%.

Tata Sons Pvt. Ltd, the promoter of Tata group, invested 118 crore to buy 26.72 million units of undisclosed financial instruments of Tata Motors differential voting rights (DVR) on the open market on 12-13 March. Tata Motors DVR offers holders fewer voting rights for the equity shares held but may provide more dividends. On 16 March, Tata Sons chairman N. Chandrasekaran bought 200,000 shares in TML-DVR.

It is tactical to buy shares of one’s own company when the market is down, but this is generally done to stabilize falling stock prices by curbing the volume of shares traded in the open market, said analysts.

“As the promoters have better visibility of their business, acquisition of additional equity from the open market means they are confident of the future developments of their companies. This also increases investor confidence in their companies,” said Mitul Shah, auto analyst, Reliance Securities.

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.