NBCC (India) Limited's (NSE:NBCC) market cap dropped ₹20b last week; State or government bore the brunt

Key Insights

• Significant control over NBCC (India) by state or government implies that the general public has more power to influence management and governance-related decisions
• Ministry of Housing and Urban Poverty Alleviation, Government of India owns 62% of the company
• Institutional ownership in NBCC (India) is 11%

To get a sense of who is truly in control of NBCC (India) Limited (NSE:NBCC), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are state or government with 62% ownership. 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 7.4%.

Let's delve deeper into each type of owner of NBCC (India), beginning with the chart below.

View our latest analysis for NBCC (India)

What Does The Institutional Ownership Tell Us About NBCC (India)?

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 NBCC (India). 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. 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 NBCC (India), (below). Of course, keep in mind that there are other factors to consider, too.

NBCC (India) is not owned by hedge funds. Ministry of Housing and Urban Poverty Alleviation, Government of India is currently the company's largest shareholder with 62% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Life Insurance Corporation of India, Asset Management Arm is the second largest shareholder owning 5.1% of common stock, and Nippon Life India Asset Management Limited holds about 2.4% of the company stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of NBCC (India)

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 information suggests that NBCC (India) Limited insiders own under 1% of the company. Keep in mind that it's a big company, and the insiders own ₹699k worth of shares. The absolute value might be more important than the proportional share. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 27% 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.

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. For example, we've discovered 1 warning sign for NBCC (India) 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.