Reliance Industries Ltd (RIL), credited with starting the equity cult in India, may find this hard to digest. The country’s largest listed company has lost almost 175,000 investors since September 2010, according to regulatory filings. In the last quarter alone, the company lost nearly 46,000 investors. At the end of December 2011, it had 3.43 million small shareholders with investments of up to Rs 1 lakh.
According to data compiled by BS Research Bureau, this is the lowest number of small shareholders the company has had since the merger of its arm Reliance Petroleum in 2009. The merger took the number of individual shareholders in RIL from just over two million to over 3.5 million. The number increased gradually over the next year and touched a high of 3.61 million in September 2010. But since then, the company has lost investors, making it the worst losing streak since 2006 (from when data are available). In percentage terms, the company has lost nearly five per cent of its investor base.
However, the share of retail shareholders has fallen marginally from 11.84 per cent to 11.38 per cent.
The reduction in small investors coincided with a significant value erosion in RIL’s share price. The stock, which closed at Rs 987.25 on September 30, 2010, lost 30.64 per cent to end at Rs 692.95 on the last trading day of 2011. The benchmark Sensex lost 23 per cent during the period.
RIL did not comment.
Sources say the company has not issued any fresh equity during the period and hence there is no scope for any substantial increase in the number of investors. “The stock has been underperforming over the past year or so. Also, investors are bearish about the prospects of the economy. However, global long-only funds have been bullish on both the India story and RIL,” said a person tracking the stock closely.
In absolute terms, this is the biggest exit of investors among Sensex firms during the period. Bharti Airtel is the other significant loser as 80,154 retail investors left the company during this period. Since Bharti’s investor base is roughly 10 per cent of Reliance’s, it has lost about fifth of its investor base. A total of 290,000 retail shareholders now own 1.08 per cent of Bharti against 376,000 shareholders owning 1.4 per cent in September 2010.
State-owned NTPC was the other big loser at 29,529 investors, amounting to 3.5 per cent of its retail investor base. Only five other Sensex firms recorded losses in the number of small investors holding shares up to a value of Rs 1 lakh. Jindal Steel (5.88 per cent) and g (5.76 per cent) also saw significant erosion of their investor base though their absolute loss was less than 8,000 investors each. Other Sensex firms saw significant addition in the number of small shareholders.
Reliance ADAG group company Reliance Power, not part of the Sensex, lost 230,000 investors during the period.
State Bank of India, Tata Steel and Larsen and Toubro are the three major gainers, each attracting over 200,000 new small shareholders during the period. State-owned Bhel was the top gainer, adding 70 per cent to its investor base, followed by Sun Pharma (57 per cent) and ONGC (51 per cent).
