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Promoter Holding – Ideal Promoter Holdings In Small Cap and Mid Cap

Discussion in 'Technical Analysis' started by shabbir, Apr 15, 2018.

  1. shabbir

    shabbir Administrator Staff Member

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    In a large-cap company, lower promoter holding can be acceptable to an extent but for a midcap and more so for small cap, I don't prefer low promoter holding. So let me share what I consider an ideal promoter holding for a particular size of the company before investing.

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    shabbir, Apr 15, 2018
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  2. bhat64

    bhat64 Apprentice

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    Thanks Shabbir for enlightening the small investor. Few questions: In case of smallcaps if they want to go for business expansion they can for loans from banks at commercial interest rates rather than equity dilution thereby reducing their holding. But generally they prefer equity dilution. Why?

    Secondly in a company like HDFC where there is zero promoter holding, does the shareholders having majority top 2 or 3 stake become board members and appoint the management? Then in that case the management is more interested in their salary and perks than increasing shareholder value?


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    bhat64, Apr 16, 2018
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  3. shabbir

    shabbir Administrator Staff Member

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    Too much loan is bad. So when you take a loan, you are to pay the next month the EMI which is tough beyond a point for every business. Equity means you are taking more partners to fund your business.

    Though this was wrongly quoted by me. HDFC Promoters have 25% stake in the company as per BSE but ValueReseach Shows 0%.

    Again company with no promoter holding means the independent board decides on things. With promoter even it is board that decides but then management has more stake and so they have more more board members.
     
    shabbir, Apr 16, 2018
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