Private companies among IRB Infrastructure Developers Limited's (NSE:IRB) largest stockholders and were hit after last week's 3.2% price drop

Key Insights

• The considerable ownership by private companies in IRB Infrastructure Developers indicates that they collectively have a greater say in management and business strategy
• 66% of the business is held by the top 3 shareholders
• 14% of IRB Infrastructure Developers is held by Institutions

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To get a sense of who is truly in control of IRB Infrastructure Developers Limited (NSE:IRB), 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 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to ₹261b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of IRB Infrastructure Developers.

See our latest analysis for IRB Infrastructure Developers

What Does The Institutional Ownership Tell Us About IRB Infrastructure Developers?

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.

IRB Infrastructure Developers 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at IRB Infrastructure Developers' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in IRB Infrastructure Developers. Our data shows that IRB Holding Private Limited is the largest shareholder with 29% of shares outstanding. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 17% by the third-largest shareholder. In addition, we found that Virendra Mhaiskar, the CEO has 0.8% of the shares allocated to their name.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of IRB Infrastructure Developers

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 suggests that insiders own under 1% of IRB Infrastructure Developers Limited in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₹2.5b worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over IRB Infrastructure Developers. 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 46%, of the IRB Infrastructure Developers stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 20% of IRB Infrastructure Developers. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand IRB Infrastructure Developers better, we need to consider many other factors. Be aware that IRB Infrastructure Developers is showing 4 warning signs in our investment analysis , and 2 of those are potentially serious...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.