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The Hindu
2 days ago
- Business
- The Hindu
Tax, securities regulations make buybacks unattractive for shareholders
A combination of taxation and regulatory changes have led to Indian listed companies losing interest in buyback of shares. According to PrimeDatabase, there were only four share buy back offers, amounting to a total of ₹186 crore as of June 26, 2025 . Last calendar year, this amounted to 38 offers with a total value of over ₹8,000 crore. 'As the data show, buybacks have completely dried up ever since the taxation rule change as per which has shifted the burden from companies to shareholders with effect from October 1, 2024 to bring it on a par with dividends,' said Pranav Haldea, MD of Prime Database Group. 'Buybacks have been negligible despite the bearish market which we had from October till March, during which buybacks typically thrive,' he said. 'Companies who might have wanted to buyback shares may have already completed it in September 2024 after the Budget announcement,' Mr. Haldea added. 'Companies which were considering a buyback may have accelerated their plans to launch before the new taxation rules came into effect,' he said. The Union government had announced that with effect from October 2024, income from buyback of shares would be taxed on a par with income from dividend. Earlier, companies were paying a 20% buyback tax. If the income that shareholders receive is considered as dividend, then shareholders will have to pay capital gains. This, according to experts, may have made buybacks less attractive for shareholders and hence may not have led to such a demand even during a bear market. Besides the North Block regulation, the markets watchdog might have also contributed to the trend. 'The reduction is primarily a consequence of SEBI's regulatory changes. SEBI had been progressively reducing the option for companies to buy back their shares through the open market, and starting this FY, it has eliminated. Companies are now restricted to undertaking a buyback only through the tender offer route,' said Arindam Ghosh, partner at Khaitan & Co. Merchant bankers, who were earlier advising companies on buyback offers, may have now lost their stream of income. 'It is possible that merchant bankers previously active in share buyback deals are facing challenges, given the recent regulatory changes by SEBI phasing out the open market buyback route. They may need to shift their focus to other areas where they are mandatorily required to be involved as an intermediary,' Mr. Ghosh said.
Mint
2 days ago
- Business
- Mint
IPO Tsunami Incoming! NSDL, JSW Cement, Hero Fincorp among 74 companies with SEBI nod to float public offers
Upcoming IPOs: The primary market is abuzz with 12 initial public offers (IPOs) underway on Dalal Street, signalling a revival after a subdued trend in the initial few months of 2025. It was only in May that the IPO market saw any decent activity, following the launch of the much-awaited Ather Energy IPO towards the end of April. Since then, some 15 mainboard IPOs have already hit the primary market, with another two set to open in the first week of July. The revival in the IPO market coincided with the strength returning to Indian stock market bulls, amid improving macro trends, strong retail and strong institutional participation. A good monsoon and RBI's rate cut action are also supportive of the market and liquidity, driving the buoyant IPO market trend in 2025. This setup is creating room for more companies to hit the market with a IPO pipeline robust. According to Prime Database, some 74 companies are sitting on SEBI approval to float their IPOs, suggesting a steady influx of public issues in the year ahead. "Rate cuts, a stabilising rupee, falling crude prices, and the return of global liquidity have created fertile ground for capital raising. Promoters — especially in consumer, manufacturing, defence, and speciality sectors — are seizing this window of optimism to monetise value at fair valuations," Harshal Dasani, Research Analyst at Invasset PMS, said. It's also a matter of catching the cycle right — 2024's uncertainty had deferred many listings, and now that markets have absorbed geopolitical noise and macro shocks, pent-up IPO supply is finally flowing through, Dasani added. High-profile names like NSDL, Hero Fincorp, JSW Cement, LG Electronics, Kent RO Systems, Bluestone Jewellery and Vikram Solar, among others, are lining up to make the most of the market sentiment, suggests data. LG Electronics' proposed ₹ 15,000 crore IPO, if floated, could be the biggest listing of 2025. According to a Bloomberg report, the company has revived IPO plans after indicating its intent to put the public offer on hold amid unfavourable market conditions. NSDL IPO is another such awaited public offer. While the IPO is entirely an offer for sale of ₹ 3,400 crore by IDBI Bank, NSE, SBI, HDFC Bank and Union Bank of India. NSDL offers a wide range of products and services to the financial and securities market. The company is the largest depository in India in terms of the number of issuers, number of active instruments, market share in demat value of settlement volume, and value of assets held under custody. Hero Fincorp ( ₹ 3668 crore), Vikram Solar ( ₹ 7000 crore), JSW Cement ( ₹ 4000 crore), Dorf-Ketal Chemicals ( ₹ 5000 crore) and Avanse Financial ( ₹ 3,000 crore) are some of the biggest IPOs lined up to hit the primary market. According to Dasani, the success of recent listings, particularly the marquee ones in financial services and exchanges, has further reinforced confidence among issuers and investors alike. "Importantly, we're seeing quality businesses come to the market—many with strong profitability, niche positioning, or structural tailwinds. Valuation discipline remains important, but the current wave feels more broad‑based and less frothy than the 2021 cycle," he opined. Commenting on the outlook for the IPO market, Mahesh Ojha, AVP Research and Business Development, at Hensex Securities, said the IPO market can remain abuzz and continue till January 2026. Any concerns on the valuation front could act as a deterrent for the IPO investors. Echoing a similar view, Dasani said that if market sentiment and liquidity remain intact, and volatility remains within range, the IPO engine could well sustain into early 2026. "From an investor perspective, selectivity will be key, but India's capital market deepening story seems to be entering a very healthy phase," he added. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies,... More
Mint
5 days ago
- Business
- Mint
India's riskier corporate bonds are booming as investors chase yields
Mumbai: India's riskiest category of investment-grade corporate bonds is drawing record interest from wealthy investors and alternative funds, as falling benchmark yields push savvier buyers further down the credit spectrum in search of higher returns. Yield on India's benchmark 10-year government bond has declined 36 basis points over the past three months to 6.27% as of Tuesday — far below the double-digit yields available in lower-rated corporate bonds. Issuances of corporate bonds rated BBB+, BBB and BBB-, the lowest tier of rating still considered investment-grade before slipping into junk status, have surged sharply in recent quarters. According to Prime Database, 450 such bonds were issued in the fiscal year ending March 2025, up from 244 in FY24, 120 in FY23 and 75 in FY22. Through June 19 in the current fiscal year (FY26), 76 additional issuances have already come to market. The funds raised have followed a different trajectory. Issuers in this segment raised ₹17,653 crore in FY25, after ₹22,219 crore in FY24, ₹4,944 crore in FY23 and ₹8,634 crore in FY22. In FY26 so far, ₹5,845 crore has been raised. Also read | Corporate bonds off to a slow start. Bank bonds may come to the rescue. The gap between issuance volumes and amounts raised partly reflects the impact of large outlier deals. In FY24, Goswami Infratech Pvt. Ltd, part of India's Shapoorji Pallonji Group, raised ₹14,300 crore through a single private placement at a steep 18.75% coupon, accounting for nearly two-thirds of that year's total BBB-category fundraising. 'The overall issuance of BBB corporate bonds increased both in number and volume from FY24 to FY25 if we take out a large private financing transaction," said Vishal Goenka, co-founder of IndiaBonds, referring to the Goswami deal. Investors are drawn to these securities for the significantly higher yields they offer relative to AAA-rated debt. A spread of 600-700 basis points is not uncommon, translating into yields as high as 14-15%. 'Rates on BBB issuances are driven by the underlying company's fundamentals, the end use of funds or the purpose of financing, and the ability to raise money from banks on mutually acceptable terms," said Bhushan Kedar, director of fixed income research at Crisil Intelligence. 'Institutional participation in AIFs is increasing as savvy debt investors chase high yields," Kedar added, noting that alternative investment funds face fewer capital lending restrictions than banks. Platforms broaden access to riskier debt A key driver behind this expansion is the rise of online bond platforms, which have opened up access to this segment for wealthy individuals and smaller institutions. 'There is evidence of increased activity and issuance in the BBB segment over the past 3 months, aligned with the broader corporate bond market growth and diversification seen in 2025," said Arjun Parthasarathy, founder and chief executive officer of INRBonds, one such platform. 'There is demand for good high-yielding issuers with strong fundamentals and potential for rating upgrades." Recent deals reflect this momentum. In June 2025, Varthana Finance Pvt Ltd (BBB rated) raised ₹25 crore at a 12.3% coupon. In March, True Credits Pvt Ltd (BBB rated) raised ₹10 crore at 18%, and LEAP India Pvt. Ltd (BB+ rated) raised ₹200 crore at 9.5%. Indifi Capital Pvt. Ltd (BBB rated) raised ₹60 crore at 13.5% in February 2025, according to Bloomberg data. Read this | Indian equities, bonds, currency show resilience amid Trump's tariff tantrum Platforms like INRBonds, IndiaBonds, and Bondbazaar have simplified access to primary issuances and secondary trading. Precise data on investor composition is scarce, but market participants say high-net-worth individuals, family offices, and AIFs have been increasingly active in recent BBB-rated issuances, alongside select institutional investors. Even so, market participants caution that such returns carry meaningful credit risk. 'These yields are more quasi-equity in nature and should be compared with equity returns, especially given the associated credit risk," Suresh Darak, founder of Bondbazaar said. Darak noted that investors are mitigating some of that risk by focusing on shorter maturities. 'Issuers' financial visibility is more predictable over shorter timeframes, making short-tenor instruments (1–1.5 years) from lower-rated issuers relatively less risky from a credit perspective," he said. Even as liquidity has improved and policy rates softened, spreads for lower-rated issuers remain wide. 'The spread is also a function of perceived credit risk. Hence, even with lower policy rates, a meaningful narrowing of the spread depends on liquidity availability and banks' willingness to lend to lower-rated entities," Darak added. And read | Gold bonds: Investors stay put despite making a killing While comprehensive data on the share of BBB-rated bonds in India's overall corporate bond market is limited, market participants say activity in this riskier segment has grown meaningfully in recent years.
Mint
04-06-2025
- Business
- Mint
Wanted: Independent directors for PSU boards. But where is the approval?
Mumbai: Over three-fourths of India's listed public sector enterprises do not have the requisite number of independent directors, as these companies continue to wait for clearance from various government departments. As many as 62 out of 79 listed PSUs lack the mandated number of independent directors, according to data from Prime Database. Despite repeated regulatory reminders, these companies await clearances from their respective ministries, delaying crucial appointments and inviting penalties from stock exchanges. Government-owned firms, including Hindustan Aeronautics Ltd, Indian Oil Corp. Ltd, Indian Railway Catering and Tourism Corp, State Bank of India, National Aluminium Company Ltd. and Steel Authority of India Ltd, did not have the minimum number of independent directors as of 2 June, according to Prime Database, a Mumbai-based market data tracking firm. The list of non-compliant PSUs includes banks, oil and gas companies, metals and mining firms, power utilities, telecommunications, railways, and engineering firms. According to the Securities and Exchange Board of India's listing regulations, at least one-third of a listed entity's board members must comprise independent directors. Additionally, if the chairman is an executive director, at least half of the board must consist of independent directors. Also Read: HPCL gets new chief, four more large PSUs in queue Boardroom bottlenecks There are more red flags when it comes to board committees: 64 PSUs lack an independent director as chairperson of their audit committee, and 68 companies do not have independent chairs for their nomination and remuneration panels. Additionally, 14 of the listed PSUs are yet to appoint a single woman director, despite gender diversity requirements, according to Prime Database. 'It's ironic that we are asking all private sector companies to comply with these requirements when government-owned companies themselves are non-compliant," said Pranav Haldea, managing director at Prime Database. With PSUs failing to comply with the market regulator's rules, many have been fined by stock exchanges. Last week, National Aluminium Company Ltd (Nalco) was fined ₹33.32 lakh for having only three independent directors—two short of the required five—on its 10-member board. A spokesperson for Nalco said the company was continuously following up with the ministry of mines, its administrative ministry, for the appointment of the requisite number of independent directors. The bottleneck lies in the approval process across various ministries, according to proxy advisory firms. 'The Prime Minister's Office should send a strong message to all concerned ministries and PSU companies that they need to be compliant, as non-compliance by PSUs doesn't send the right message to investors," said Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm. 'For instance, when the government, as a major shareholder, is involved in abusive transactions or there is trouble with key management, independent directors are the custodians of minority shareholders' interests," Subramanian said. Also Read: India's PSU banks outshine private peers in arresting bad loans Many of the largest money managers, including BlackRock and Vanguard, have voiced their concerns when these companies have sought shareholder approval for the appointment of directors, according to voting disclosures reviewed by Mint. In August last year, Hindustan Aeronautics sought shareholder approval for the appointment of former chairman C.B. Ananthakrishnan. Nearly a fourth of public institutions opposed the decision. 'Nominee serves as chair of the board and bears responsibility for lack of independence. Nominee is an executive director on the audit committee," noted BlackRock, the world's largest money manager, with $11.6 trillion in assets under management. In the same month, Hindustan Petroleum Corp. sought shareholders' approval for the appointment of Pankaj Kumar as a director, but 28.35% of public institutions, including Vanguard, opposed his re-appointment. Despite governance lapses, investor interest in PSUs has surged. The BSE PSU Index, which comprises 63 companies, has outperformed the Sensex over the last five years. The index has gained 301% between 5 June 2020 and 3 June 2025, while the Sensex has risen by 135.5% during this period.
Time of India
04-06-2025
- Business
- Time of India
Rs 43,000 crore selloff by promoters! Insider exits flash warning sign for Nifty bulls
Just as Nifty notched a hat-trick of monthly gains with a 12% surge through May, a parallel trend has emerged: India Inc's promoters are cashing out. In what could be viewed as a potential red flag for the ongoing market rally to accelerate further, promoters and other large shareholders have offloaded shares worth a staggering Rs 43,400 crore in May alone. This comes at a time when foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have together pumped in nearly Rs 80,000 crore into Indian equities last month, alongside steady retail and HNI buying. The sell-off, led by high-profile block deals, is raising eyebrows about insider sentiment, especially with valuations running high. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villa For Sale in Dubai Might Surprise You Villas in Dubai | Search ads Learn More Undo Topping the list is Rakesh Gangwal , co-founder of IndiGo , who sold shares worth over Rs 11,560 crore on May 27 in a fresh round of stake trimming in InterGlobe Aviation . A day later, British American Tobacco (BAT) offloaded a 2.5% stake in ITC through its subsidiary for around Rs 12,900 crore, one of the largest single-day exits in recent memory, shows data compiled from Prime Database. Earlier in the month, Singtel sold Bharti Airtel shares worth Rs 12,880 crore on May 16. Meanwhile, General Atlantic Singapore Fund exited KFin Technologies in a Rs 1,790 crore deal, and Sajjan Jindal Family Trust pared its stake in JSW Infrastructure for Rs 1,210 crore. Live Events Prime Database shows promoter selling activity also surfacing in smaller firms like Gravita India, PG Electroplast, TD Power, Paras Defence, and Ami Organics, fanning concerns among market watchers. Block deals continued this week as well with action seen in Zinka Logistics, Aptus Value Housing Finance, Yes Bank and Ola Electric on Tuesday. PE investor True North and others sold over $175 million worth of Niva Bupa Health Insurance shares on Monday. Siddharth Khemka of Motilal Oswal Financial Services pointed to liquidity dynamics behind the move. 'If FIIs want to buy, and DIIs and retail don't want to sell, then who provides supply? The promoters are stepping in. They want liquidity – they can't call up individual investors to offload 3% blocks. When institutional money is present, that's when promoter selling comes into play,' he said, adding that block deals and IPOs are likely to surge again as markets stabilize. Also read | India crowned top destination for stock compounders, says BofA; lists 9 structural themes Anshul Saigal, founder of Saigal Capital, cautioned against over-interpreting promoter sales. 'There can be multiple reasons to sell – like the Whirlpool case where the parent is in distress. I pay less attention to promoter sales and more to purchases. There's only one reason to buy – the belief that the stock will go up.' However, Sandip Sabharwal, market expert, flagged a possible contradiction. 'If companies are guiding for strong growth but promoters are dumping large volumes at high valuations, that's a dichotomy. It raises questions. I'm more concerned about small and midcap promoter sales than the larger ones like InterGlobe or BAT's sale in ITC. But even large-cap exits pull liquidity from the system and cap market upside.' While the promoter exit wave may be driven by individual circumstances – ranging from global financial pressures to portfolio rebalancing – the timing is unmistakable. As the market roars ahead, insiders are cashing in. Whether it's a canary in the coal mine or just business as usual remains to be seen, but for now, Nifty bulls may want to tread with a touch more caution. Also read | Rs 15 lakh crore in net profit! India Inc's top 500 cos break records in FY25 despite downgrades ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
