Both private companies who control a good portion of SPML Infra Limited (NSE:SPMLINFRA) along with institutions must be dismayed after last week's 10% decrease

Key Insights

• Significant control over SPML Infra by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 5 investors have a majority stake in the company with 50% ownership
• Insiders own 11% of SPML Infra

We've discovered 3 warning signs about SPML Infra. View them for free.

Every investor in SPML Infra Limited (NSE:SPMLINFRA) should be aware of the most powerful shareholder groups. With 42% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 27% shares weren’t spared from last week’s ₹1.2b market cap drop, private companies as a group suffered the maximum losses

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

View our latest analysis for SPML Infra

What Does The Institutional Ownership Tell Us About SPML Infra?

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

We note that hedge funds don't have a meaningful investment in SPML Infra. Our data shows that Zoom Industrial Services Ltd. is the largest shareholder with 20% of shares outstanding. National Asset Reconstruction Company Ltd , Asset Management Arm is the second largest shareholder owning 15% of common stock, and SPML India Limited holds about 6.4% of the company stock.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of SPML Infra

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. 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.

Our most recent data indicates that insiders own a reasonable proportion of SPML Infra Limited. It has a market capitalization of just ₹10b, and insiders have ₹1.1b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over SPML Infra. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 42%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 learn about the 3 warning signs we've spotted with SPML Infra (including 1 which doesn't sit too well with us) .

Of course this may not be the best stock to buy. So take a peek at this free 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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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.