Should investors worry about companies with no promoters? Here's a reality check

We at CNBC-TV18 have chosen six companies that do not have a classified promoter and 100 percent of the shareholding is with the public.

Some criteria we kept in mind before choosing these companies include a market capitalisation of at least Rs 10,000 crore and a trading history of no less than five years.

These six companies are - ICICI Bank, L&T, ITC, RBL Bank, Federal Bank and IEX. Lets look at the average five-year return for these companies:

RBL Bank shares took a beating between 2019-2021 as the lender suffered from corporate governance and asset quality issues. The stock is in focus since Mahindra & Mahindra acquired a stake in July. Data showed that even the Kamath Brothers-led Zerodha Broking owns a stake valued at just under Rs 180 crore in the private lender.

As the table suggests, the five companies have average returns ranging from 12-46 percent. The higher-end number is such due to shares of IEX gaining as much as 230 percent in 2021 before they corrected. If we exclude 2021, the average return of IEX for the remaining years falls to zero.

ICICI Bank is another case in point. The lender was under the scanner after allegations against its former MD & CEO Chanda Kochhar. But since the new management has taken over, shares have jumped nearly 4x from the lows.

This section also includes six private companies, with a five-year trading history and at least 60 percent promoter holdings. PSUs are excluded from this list.

TCS is owned by the Tata Group, Avenue Supermarts is backed by veteran investor Radhakishan Damani, GCPL is a Godrej Group company, the promoter pedigree here does not need to be defined. But have they done as well as their professionally run peers?

Here's a look at their five-year returns:

As the table shows, the five-year average return of these promoter-run companies range between 5-25 percent, nearly the same as ones that do not have a promoter. Specific companies have their own factors in this list as well.

Shares of Vedanta have surged only in two out of the last five years and are down nearly 22 percent this year too. Although the stock has generously rewarded investors in terms of dividend, the impending debt repayments and promoter pledges continue to remain an overhang.

V Jayasankar, MD & Member of Board at Kotak Investment Banking told CNBC-TV18 in an interaction on August 22 that not all promoter sales should be viewed in negative light. "I think it's all driven by either a PE investor wanting an exit over a three to five year period, which is fair, because the normal period for a PE investor is three to five years and if the markets are at its robustness, why not," he said.

"I think it's very likely that you'll see more of these transactions. So I think you should take it as a trend. And when the markets are robust, that's the right time for any block sell," Jayasankar added.

At the end of the day, shareholders will reward those companies that deliver performance-wise - promoters, or no promoters.