India Infrastructure, Power and Industrials-- Floating Gems: :: JPMorgan

In this report, we analyze four aspects of stock ownership: free float,
institutional holding, insider transactions and promoter share pledges.
Together, these are good indicators of share performance, in
conjunction with fundamentals, of course.

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 FII interest remains in select stocks in the power sector: In the June
quarter, the FII stake in average free float increased 214bps, while DIIs
were sellers. FII flows improved in our preferred picks NTPC, JSW
and PWGR, while DIIs were sellers of the regulated utilities. FIIs
were sellers of leveraged IPPs JPVL, Lanco and Adani, while DII
interest in these was largely flat.
 Institutional holding in Industrials stays flat. FII holdings in
Industrials declined 46bps, to 20%, with holdings in L&T declining by
62bps qoq, to 16%, while DIIs were buyers of the stock (up 57bps qoq,
to 37%), led by LIC, which purchased 14M shares (15 July at
Rs1,006/share).
 Ports saw institutional holding pick up due to promoter stake sales.
With the OFS/QIPs in ADSEZ and Essar Ports, institutional holding (led
by FIIs) as a % of free float increased for both, but more meaningfully
for ADSEZ (81% vs. 70% in the Jun-q). GMR saw a slight uptick in both
DII and FII holding, while institutions were sellers of GVK and RELI.
 Insider transactions: In the Jun-q, promoter stakes decreased in Essar
Ports, ADSEZ, ADE and JSW as they complied with SEBI norms to
maintain a 75% free float. Promoter holdings increased in Adani Power
(500bps, to 75%) with the issue of preference shares in lieu of converting
promoter debt to equity. JPA promoters reduced their stake to 44.7% in
the Mar-q with the sale of 64M shares in a QIP at Rs83/share (CMP
Rs47), while Jaypee Ventures (a promoter-owned company) purchased
8.5M shares in the Jun-q, increasing promoter holdings to 45.1%.
 Promoter pledge ratio: Promoter pledge is the highest for JPVL (69%,
up ~160bps qoq), Crompton Greaves (64%, up 260bps qoq - consistent
increases over past 4Qs), Lanco (77% vs. 36% in Mar-q) and Suzlon &
Essar (both stable at 100%) within our coverage universe. Pledges also
increased for GMR (~320bps qoq and ~1,200bps yoy, to 40%) and JSW
Energy (up 1,700bps qoq, to 50%), while declining for the leveraged
Adani Power (down 820bps qoq, to 13.7%) and Tata Power (down
~220bps qoq, to 4.6%).