TCS, Wipro may offload shares worth Rs 75,000 crore if public shareholding rises to 35%

The promoters of technology services companies Tata Consultancy Services and Wipro may have to offload shares worth nearly Rs 75,000 crore once the threshold of minimum public shareholding in listed companies increases to 35% following the proposal made in Union Budget today, said analysts.

Finance Minister Nirmala Sitharaman has asked the market regulator Securities and Exchange Board of India (SEBI) to consider raising the current thresold from 25% to 35%.

“It is (the) right time to consider increasing minimum public shareholding in listed companies,” Sitharaman said in her budget speech.

The tech services duo saw their share prices declining after the Budget announcement. While TCS share price dipped by 3.91% or Rs 87.75 to Rs 2145.85; Wipro stock declined by 3.17% or Rs 9 to Rs 274.80 at 2.24 pm on the BSE.

Tata Sons owns 72% in TCS, while the Premjis hold more than 73.8% in Wipro

Brokerage firm Centrum has suggested the SEBI should provide adequate time to the listed companies for this process.

“While we need to await SEBI regulations regarding how much time will be given to these companies to meet with this minimum public shareholding norms, the overhang of this requirement of off-loading of promoter shareholding can have significant impact on the markets and the specific stocks. The regulator needs to provide sufficient time to meet this requirement so as not to over-flood the markets with stake sales by promoters,” wrote Jagannatham Thunuguntla, Head of Research (Wealth), at Centrum Broking, in a note.

While the move would hit large companies such as both TCS and Wipro; firms such as Siemens and Bosch would also be impacted. Bosch’s promoter shareholding stands at 70.54% while Siemens stands at 75%.

L&T Technology Services has a promoter holding of 78.8% and would have to dilute shares worth over Rs 2400 crore. Other companies that may be hit include Quick Heal Technologies, Take Solutions, Datamatics Global Services, Accelya Solutions India, Axiscades Engineering Technology, Nucleus Software Exports, Newgen Software Technologies, all of which have a promoter holding of more than 65%.