Insiders were the key beneficiaries as Ramky Infrastructure Limited's (NSE:RAMKY) market cap rises to ₹16b

By
Simply Wall St
Published
January 12, 2022
NSEI:RAMKY
Source: Shutterstock

To get a sense of who is truly in control of Ramky Infrastructure Limited (NSE:RAMKY), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 66% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by ₹1.9b last week.

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

See our latest analysis for Ramky Infrastructure

ownership-breakdown
NSEI:RAMKY Ownership Breakdown January 12th 2022

What Does The Lack Of Institutional Ownership Tell Us About Ramky Infrastructure?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Ramky Infrastructure's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

earnings-and-revenue-growth
NSEI:RAMKY Earnings and Revenue Growth January 12th 2022

Ramky Infrastructure is not owned by hedge funds. Our data shows that Alla Ayodhya Reddy is the largest shareholder with 50% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.9% and 4.8% of the stock. Furthermore, CEO Rathnakara Yancharla is the owner of 2.4% of the company's shares.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Ramky Infrastructure

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 Ramky Infrastructure Limited. This means they can collectively make decisions for the company. Given it has a market cap of ₹16b, that means they have ₹10b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 23% 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.

Private Company Ownership

We can see that Private Companies own 11%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Ramky Infrastructure (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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