While private companies own 28% of MRF Limited (NSE:MRF), retail investors are its largest shareholders with 31% ownership

Key Insights

• Significant control over MRF by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 13 shareholders
• Insider ownership in MRF is 13%

Every investor in MRF Limited (NSE:MRF) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 31% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And private companies on the other hand have a 28% ownership in the company.

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

View our latest analysis for MRF

What Does The Institutional Ownership Tell Us About MRF?

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 MRF does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 MRF, (below). Of course, keep in mind that there are other factors to consider, too.

MRF is not owned by hedge funds. MOWI Pvt Ltd is currently the company's largest shareholder with 12% of shares outstanding. Comprehensive Investment & Finance Company Pvt Ltd is the second largest shareholder owning 10% of common stock, and SBI Funds Management Limited holds about 5.0% of the company stock. In addition, we found that K. M. Mammen, the CEO has 0.6% of the shares allocated to their name.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of MRF

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of MRF Limited. Insiders own ₹46b worth of shares in the ₹356b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 31% stake in MRF. 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 Company Ownership

It seems that Private Companies own 28%, of the MRF stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for MRF you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.