Too often investors are focused on analysing the balance sheet and profit & loss account to evaluate the financial health of the company. They will do all the ratio calculations and other data-crunching but will never unearth the most important clue which possibly destroys their substantial wealth at one go, in spite of all the good fundamentals? What it is, that the investors miss out, in Balance Sheet and P&L reading? SAMCO gives that clue in the form of “SAMCO Pledge Monitor”
What is SAMCO Pledge Monitor?
SAMCO Pledge monitor helps identify and track what is the extent of Promoters’ pledged holdings, the overall pledge as a percentage of their own holding, and pledge as a percentage of the entire company’s outstanding equity capital. It also intelligently assigns the riskiness, to the extent of the indebtedness of the promoters and resulting value destruction.
It would be an eye-opener and a big surprise to know that 1 out of every 10 stocks listed on BSE has promoter indebtedness of more than 50% of their own holdings, huge levels by any standards. This poses a tremendous risk to the stock. If for any reason the promoters are not able to repay the lenders, the pledge will be invoked leading to ruthless selling of shares in the market by the lenders irrespective of the price quoted. This is the real risk that hardly gets captured.
Fundamentals alone may not always decide the value of the shares, but the demand and supply of the shares in the stock markets also play a key role. If the huge quantity of shares is sold by lenders, the counterbalancing buyers may not be present to buy, which leads to a downward spiral of the prices, which eventually snowballs into a chain reaction wherein even other pledges may also be revoked and the stock just vertically tanks giving nightmare to investors for no fault of his, or his homework on the financials of the company.
SAMCO Pledge monitor helps clients invaluably at just at a click of the mouse, to know what is the extent of promoter indebtedness and resulting riskiness thereof, on the likely overhang selling pressure which may materialize anytime. The examples of SUZLON or Kingfisher Airlines are a perfect case wherein there was a continuous supply of stocks in the market by the lenders resulting in tremendous price destruction of these shares. It’s our endeavor that, our clients must always stay ahead of the street and take intelligent and profitable decisions all the time. Welcome to SAMCO!! Welcome to a world of Smart Investing!! Welcome to SAMCO Pledge Monitor!!