Private companies invested in Electrosteel Castings Limited (NSE:ELECTCAST) copped the brunt of last week's ₹5.1b market cap decline

Key Insights

• Significant control over Electrosteel Castings by private companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 11 shareholders
• Institutions own 14% of Electrosteel Castings

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A look at the shareholders of Electrosteel Castings Limited (NSE:ELECTCAST) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 8.3% decline in share price, private companies suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Electrosteel Castings.

Check out our latest analysis for Electrosteel Castings

What Does The Institutional Ownership Tell Us About Electrosteel Castings?

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.

Electrosteel Castings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Electrosteel Castings' historic earnings and revenue below, but keep in mind there's always more to the story.

Electrosteel Castings is not owned by hedge funds. Our data shows that G.K. and Sons Private Limited is the largest shareholder with 8.2% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.7% and 6.4% of the stock.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Electrosteel Castings

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. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Shareholders would probably be interested to learn that insiders own shares in Electrosteel Castings Limited. In their own names, insiders own ₹1.6b worth of stock in the ₹56b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Electrosteel Castings. 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

Our data indicates that Private Companies hold 50%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Electrosteel Castings better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Electrosteel Castings you should be aware of.

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.