Promoters' stake in top 5 IT companies drops; FII pie rises

The promoter and promoter group stakes in India's top five IT services exporters TCS, Infosys, Wipro, Satyam and HCL Technologies have come down between FY2005 and FY2007, even as these companies chart an aggressive roadmap to expand global footprint.

Over the last three years, these companies witnessed a decline in their promoter group holding, and some of them saw the Foreign Institutional Investor (FII) holdings going up. The decline was steep – in excess of five percentage points in case of Infosys and Satyam, while it was a little over three percentage points in case of TCS, Wipro and HCL.The decline in Infosys is due to the company's sponsored secondary ADS offers during these years, wherein promoters diluted their holdings to certain extent. Infosys' two sponsored secondary ADS offerings — in May 2005 and November 2006 — saw its overseas float increase to 19 per cent.

In the case of Wipro, the promoter's holding declined as the total number of shares went up due to Employee Stock Options (ESOPs). Wipro sources said there was no divestment of any shares by the promoter group, Mr Azim Premji and family, during the period. Mr Premji and family owned 79.58 per cent of Wipro's shares as of end-June, 2007. But Wipro did see the FII holding going up from 3.80 per cent as of March 2005 to 5.26 per cent as of June 2007.

For TCS, the promoters' holding came down partly on account of merger of Tata Infotech with TCS through a share-swap. This involved issue of new shares, leading to dilution of promoter stake. In addition, the promoters have sold some shares to institutional shareholders. The TCS scrip also appears to have attracted the interest of FIIs, who have raised their holding by one percentage point between FY2005 and FY2007 through the open market.

The promoters' stake in HCL stood at 70.67 per cent in FY 05 and came down to 67.55 per cent in FY07 due to stock options. The promoter holding in June 2007 remained virtually unchanged at 67.55 per cent.

Interestingly, in the case of Infosys and Satyam, the FII shareholding has come down during the past three years in the Indian float. FII holding in Infosys, which stood at 42.87 per cent as of March 2005 came down to 37.91 per cent in March 2006 and slid further to 32.55 per cent by end-March 2007. In Satyam, the FII holding declined to 47.85 per cent in June 2007 as against 56.06 per cent in March 2005. Satyam's promoters have already corporatised their holdings last year. Satyam officials did not respond to Business Line's queries on decline in promoter stake.