Promoters hike stake in own firms as confidence grows

Promoters of about one-fifth of the BSE 500 stocks have raised stake in their companies either through open market or warrants or open offers, in some cases, over the past two years, indicating confi dent about the prospects of their companies.

Data compiled by ET shows, two-thirds, or about 76 of the 102, companies in which promoters increased their stake, have outperformed the Sensex. Companies like Indo Count, Caplin Point Lab, Trident have seen share prices increase multi-fold; while shares of Kansai Nerolac, JK Tyre, Ramkrishna Forgings and Strides Shasun, among others, have doubled.

The Sensex has gained about 5% in the last two years. As promoters have all the information about the company, increasing stake signals better times ahead for the business, say analysts. However, it should not be the only reason for buying a stock, they warn.