Hiteshbhai, regarding Pledging, I have the following question:
I have been reading about Bajaj Consumer for the last few days. In my opinion, its financial performance (mergin, ROCE, dividend etc.) and also the act of the management so far indicates that they are conservative, transparent and shareholder friendly. But the only turn off is share pledging, which the promoter is doing to fund his other infra/sugar business. Bajaj Consumer is financially stable and needs no such money.
Now what happens if the promoter’s investment in the infra/sugar doesn’t give returns or make losses? He will need to sell his stake to return the money and eventually promoters stake will decrease in Bajaj Consumer.
But how does that affect Bajaj Consumer’s financial performance? I agree that the stock price can nosedive if this happens, but I can find no reason how Bajaj Consumer’s turnover/profit/cashflow detoriate because of promoter’s stake decrease!
Am I missing something?
Can you please put some light on this?