What Is The Ownership Structure Like For RattanIndia Power Limited (NSE:RTNPOWER)?

The big shareholder groups in RattanIndia Power Limited (NSE:RTNPOWER) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.

RattanIndia Power is a smaller company with a market capitalization of ₹19b, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about RattanIndia Power.

View our latest analysis for RattanIndia Power

What Does The Institutional Ownership Tell Us About RattanIndia Power?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that RattanIndia Power does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of RattanIndia Power, (below). Of course, keep in mind that there are other factors to consider, too.

Our data indicates that hedge funds own 8.0% of RattanIndia Power. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. RattanIndia Infrastructure Limited is currently the largest shareholder, with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 15%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of RattanIndia Power

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of RattanIndia Power Limited in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about ₹25m worth of stock. This compares to a market capitalization of ₹19b. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public holds a 17% stake in RattanIndia Power. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 15%, of the RattanIndia Power stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

It appears to us that public companies own 28% of RattanIndia Power. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - RattanIndia Power has 4 warning signs (and 2 which are concerning) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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