Despite recent sales, KNR Constructions Limited (NSE:KNRCON) insiders own 49% shares but recent downturn may have set them back

Key Insights

• Insiders appear to have a vested interest in KNR Constructions' growth, as seen by their sizeable ownership
• The top 3 shareholders own 52% of the company
• Recent sales by insiders

Every investor in KNR Constructions Limited (NSE:KNRCON) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, the group bore the brunt of last week’s ₹10b market cap loss.

Let's delve deeper into each type of owner of KNR Constructions, beginning with the chart below.

View our latest analysis for KNR Constructions

What Does The Institutional Ownership Tell Us About KNR Constructions?

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.

KNR Constructions already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 KNR Constructions' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in KNR Constructions. Looking at our data, we can see that the largest shareholder is the CEO Kamidi Reddy with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 13% and 8.5%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Kamidi Reddy is also Chief Financial Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of KNR Constructions

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.

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.

It seems insiders own a significant proportion of KNR Constructions Limited. It is very interesting to see that insiders have a meaningful ₹44b stake in this ₹90b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. 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 instance, we've identified 2 warning signs for KNR Constructions (1 doesn't sit too well with us) that you should be aware of.

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.