State or government invested in MSTC Limited (NSE:MSTCLTD) copped the brunt of last week's ₹5.0b market cap decline

Key Insights

• MSTC's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• India owns 65% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls MSTC Limited (NSE:MSTCLTD), then you'll have to look at the makeup of its share registry. With 65% stake, state or government possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, state or government endured the biggest losses as the stock fell by 10%.

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

See our latest analysis for MSTC

What Does The Institutional Ownership Tell Us About MSTC?

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.

MSTC 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. 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 MSTC's historic earnings and revenue below, but keep in mind there's always more to the story.

MSTC is not owned by hedge funds. India is currently the largest shareholder, with 65% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 1.8% and 1.2% of the shares outstanding respectively, Jupiter Fund Management Plc and ValueQuest Capital LLP are the second and third largest shareholders.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of MSTC

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 MSTC Limited in their own names. It seems the board members have no more than ₹388m worth of shares in the ₹43b 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

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MSTC. 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:

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

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.