GMR Power And Urban Infra Limited's (NSE:GMRP&UI) market cap dropped ₹6.5b last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in GMR Power And Urban Infra indicates that they collectively have a greater say in management and business strategy
• The top 8 shareholders own 51% of the company
• 16% of GMR Power And Urban Infra is held by Institutions

To get a sense of who is truly in control of GMR Power And Urban Infra Limited (NSE:GMRP&UI), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by ₹6.5b.

Let's take a closer look to see what the different types of shareholders can tell us about GMR Power And Urban Infra.

View our latest analysis for GMR Power And Urban Infra

What Does The Institutional Ownership Tell Us About GMR Power And Urban Infra?

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 GMR Power And Urban Infra. 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. 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 GMR Power And Urban Infra's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in GMR Power And Urban Infra. Looking at our data, we can see that the largest shareholder is GMR Enterprises Private Limited with 17% of shares outstanding. With 11% and 8.7% of the shares outstanding respectively, GMR Business & Consultancy LLP and Synergy Industrials, Metals And Power Holdings Ltd are the second and third largest shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 GMR Power And Urban Infra

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.

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.

Our most recent data indicates that insiders own less than 1% of GMR Power And Urban Infra Limited. But they may have an indirect interest through a corporate structure that we haven't picked up on. It seems the board members have no more than ₹104m worth of shares in the ₹75b company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 44%, of the GMR Power And Urban Infra stock. 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. Case in point: We've spotted 4 warning signs for GMR Power And Urban Infra you should be aware of, and 2 of them are a bit concerning.

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.