Every investor in Electrosteel Castings Limited (NSE: ELECTCAST) should know the most powerful shareholder groups. With 54% of the capital, private companies hold the maximum shares in the company. In other words, the group faces the maximum upside potential (or downside risk).
As a result, private companies were the biggest beneficiaries of last week’s 10% gain.
Let’s take a closer look at what different types of shareholders can tell us about Electrosteel Castings.
Our analysis indicates that ELECTCAST is potentially undervalued!
What does institutional ownership tell us about Electrosteel castings?
Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.
Electrosteel Castings already has institutions on the share register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Electrosteel Castings revenue and historical earnings below, but keep in mind there’s always more to tell.
Hedge funds don’t have a lot of shares in Electrosteel Castings. GK and Sons Private Limited is currently the company’s largest shareholder with 8.5% of the outstanding shares. Meanwhile, the second and third largest shareholders hold 6.9% and 6.6% of the outstanding shares respectively.
Upon closer inspection, we found that more than half of the company’s shares are held by the top 8 shareholders, suggesting that the interests of the larger shareholders are to some extent balanced by those of the smaller ones.
While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. Our information suggests there is no analyst coverage of the stock, so it is likely little known.
Insider Ownership of Electrosteel Castings
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Shareholders would probably be interested to learn that insiders hold shares in Electrosteel Castings Limited. It has a market capitalization of just ₹24 billion, and insiders have shares worth ₹2.2 billion, in their own name. It’s good to see insider investing, but it might be worth checking to see if those insiders have been buying.
General public property
The general public, including retail investors, owns 28% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.
Private Company Ownership
We can see that private companies hold 54% of the issued shares. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.
It is always useful to think about the different groups that own shares in a company. But to better understand Electrosteel Castings, we need to consider many other factors. Example: we have identified 3 warning signs for Electrosteel Castings you should be aware, and 1 of them is a bit unpleasant.
Sure this may not be the best stock to buy. So take a look at this free free list of interesting companies.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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