Of late, institutional investors, big broking houses and marquee investors have been getting increasingly special treatment from listed companies.
Over the past few days, a host of companies ― almost all of them on the Sensex ― have hosted exclusive meets for institutional investors or brokerages houses. For instance, HDFC Bank met Morgan Stanley on June 22. State Bank of India, which met 21 big investors, including mutual funds, PE funds and broking houses, said: “Pursuant to the applicable provisions of the SEBI (LODR) Regulations, we advise having interacted with following investors/analysts on 24.06.2020, wherein information already in public domain was shared with them.”
It’s not just the large-caps; even mid- and small-cap companies such as TTK Prestige, PVR and Bajaj Consumer Care met institutions and had exclusive interactions with them. Not to be left behind, the BSE met Jupiter Asset Management on June 3, Ace Lansdowne Partners on June 9 and Sunidhi Securities and Finance Ltd on June 29.
While there is no such mechanism for retail investors, big investors will find their way to reach out to the management.
“Only some companies are informing the stock exchanges about such calls — either before or after such calls are held,” said an active market participant. According to such participants, retail investors who try to enter the concall are politely asked to leave, since it is only meant for institutions.
Information for all
Anup Khandelwal, President, Association of National Exchanges Members of India, stated categorically that all the stakeholders, including minority shareholders, should be briefed about any material occurrence/events/development of the company. “The same holds good for all small share brokers as well, as we have noticed that big broking houses are given preference and they hold special meetings with companies. SEBI should not encourage such activities for fair and equal treatment to all stakeholders,” he added.
“SEBI’s LODR regulations have levelled the playing field for retail investors by providing them with access to conference calls held by listed companies, to discuss their operational and financial performance,” said Nitin A Khandkar, a former sell side analyst with a domestic brokerage house. “I believe all companies should encourage the participation of retail investors in such conference calls, as access to information should not be the prerogative of institutional investors alone.”
A market expert in Chennai, who has been tracking the market for the last two-and-half decades, said: “The practice of exclusively meeting certain people or institutions should either be stopped or made available live to others also, through the stock exchanges and via their (companies’) own websites.”
As the company is not meeting them on separate occasions, even influential big investors may not be aware of what transpired with the other groups, the expert added.
Holding concalls for a select group of investors is a contentious issue, said another analyst. There is no level playing field, and it is against small investors. Such events highlight the need for a revamp of LODR regulations, so that even such calls are intimated to stock exchanges in advance and retail investors are allowed to participate, the analyst added.
“After such analyst meets, some stocks rise sharply. Though that may be a coincidence, still it may raise some doubts in investors’ minds on what they might have missed out at such a meeting,” added the Chennai-based veteran.