Institutions profited after GMM Pfaudler Limited's (NSE:GMMPFAUDLR) market cap rose ₹5.1b last week but individual investors profited the most

Key Insights

• GMM Pfaudler's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 16 shareholders
• Insider ownership in GMM Pfaudler is 11%

Every investor in GMM Pfaudler Limited (NSE:GMMPFAUDLR) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 38% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 7.3% price gain, institutions also received a 24% cut.

In the chart below, we zoom in on the different ownership groups of GMM Pfaudler.

See our latest analysis for GMM Pfaudler

What Does The Institutional Ownership Tell Us About GMM Pfaudler?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in GMM Pfaudler. 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 GMM Pfaudler, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in GMM Pfaudler. Looking at our data, we can see that the largest shareholder is Millars Machinery Company Private Limited with 8.6% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.3% and 5.2% of the stock.

After doing some more digging, we found that the top 16 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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 GMM Pfaudler

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.

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 GMM Pfaudler Limited. It has a market capitalization of just ₹75b, and insiders have ₹7.9b worth of shares in their own names. 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

The general public, who are usually individual investors, hold a 38% stake in GMM Pfaudler. 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

We can see that Private Companies own 24%, of the shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand GMM Pfaudler better, we need to consider many other factors. For example, we've discovered 1 warning sign for GMM Pfaudler that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.