Stock Analysis

Dynamatic Technologies Limited's (NSE:DYNAMATECH) market cap surged ₹2.1b last week, private companies who have a lot riding on the company were rewarded

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NSEI:DYNAMATECH
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A look at the shareholders of Dynamatic Technologies Limited (NSE:DYNAMATECH) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 37% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private companies benefitted the most after the company's market cap rose by ₹2.1b last week.

Let's take a closer look to see what the different types of shareholders can tell us about Dynamatic Technologies.

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ownership-breakdown
NSEI:DYNAMATECH Ownership Breakdown November 29th 2022

What Does The Institutional Ownership Tell Us About Dynamatic Technologies?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Dynamatic Technologies does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Dynamatic Technologies' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NSEI:DYNAMATECH Earnings and Revenue Growth November 29th 2022

Dynamatic Technologies is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is J K M Holding Pvt., Ltd. with 18% of shares outstanding. Udayant Malhoutra & Co., Pvt Ltd is the second largest shareholder owning 10% of common stock, and Samena Capital holds about 8.8% of the company stock. Additionally, the company's CEO Udayant Malhoutra directly holds 8.3% of the total shares outstanding.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Dynamatic Technologies

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 information suggests that insiders maintain a significant holding in Dynamatic Technologies Limited. Insiders own ₹2.2b worth of shares in the ₹17b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dynamatic Technologies. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 8.8% stake in Dynamatic Technologies. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 37%, of the shares on issue. 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.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Dynamatic Technologies , and understanding them should be part of your investment process.

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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