Power Mech Projects Limited's (NSE:POWERMECH) largest shareholder, CEO Sajja Babu sees holdings value fall by 6.2% following recent drop

Key Insights

• Insiders appear to have a vested interest in Power Mech Projects' growth, as seen by their sizeable ownership
• 55% of the business is held by the top 4 shareholders
• Institutions own 27% of Power Mech Projects

To get a sense of who is truly in control of Power Mech Projects Limited (NSE:POWERMECH), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to ₹83b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Power Mech Projects, beginning with the chart below.

Check out our latest analysis for Power Mech Projects

What Does The Institutional Ownership Tell Us About Power Mech Projects?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Power Mech Projects. 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 Power Mech Projects' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Power Mech Projects. Looking at our data, we can see that the largest shareholder is the CEO Sajja Babu with 31% of shares outstanding. Aishwarya Kurra is the second largest shareholder owning 9.1% of common stock, and HDFC Asset Management Company Limited holds about 8.6% of the company stock.

On looking further, we found that 55% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Power Mech Projects

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 the majority of Power Mech Projects Limited. This means they can collectively make decisions for the company. That means they own ₹48b worth of shares in the ₹83b company. That's quite meaningful. 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

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Power Mech Projects. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Power Mech Projects .

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.