State or government who have a significant stake must be disappointed along with institutions after BEML Limited's (NSE:BEML) market cap dropped by ₹6.2b

Key Insights

• The considerable ownership by state or government in BEML indicates that they collectively have a greater say in management and business strategy
• 54% of the company is held by a single shareholder (India)
• Institutional ownership in BEML is 25%

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Every investor in BEML Limited (NSE:BEML) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is state or government. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 25% shares weren’t spared from last week’s ₹6.2b market cap drop, state or government as a group suffered the maximum losses

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

See our latest analysis for BEML

What Does The Institutional Ownership Tell Us About BEML?

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.

BEML already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 BEML, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in BEML. Looking at our data, we can see that the largest shareholder is India with 54% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. HDFC Asset Management Company Limited is the second largest shareholder owning 7.7% of common stock, and Kotak Mahindra Asset Management Company Limited holds about 4.8% of the company stock.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of BEML

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data cannot confirm that board members are holding shares personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in BEML. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for BEML that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.