While individual investors own 18% of Indian Railway Catering & Tourism Corporation Limited (NSE:IRCTC), state or government are its largest shareholders with 70% ownership

By
Simply Wall St
Published
November 25, 2021
NSEI:IRCTC
Source: Shutterstock

If you want to know who really controls Indian Railway Catering & Tourism Corporation Limited (NSE:IRCTC), then you'll have to look at the makeup of its share registry. With 70% stake, state or government possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual investors, on the other hand, account for 18% of the company's stockholders.

In the chart below, we zoom in on the different ownership groups of Indian Railway Catering & Tourism.

Check out our latest analysis for Indian Railway Catering & Tourism

ownership-breakdown
NSEI:IRCTC Ownership Breakdown November 26th 2021

What Does The Institutional Ownership Tell Us About Indian Railway Catering & Tourism?

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 Indian Railway Catering & Tourism. 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 Indian Railway Catering & Tourism's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NSEI:IRCTC Earnings and Revenue Growth November 26th 2021

Hedge funds don't have many shares in Indian Railway Catering & Tourism. India is currently the company's largest shareholder with 67% of shares outstanding. This implies that they have majority interest control of the future of the company. With 2.1% and 1.4% of the shares outstanding respectively, Life Insurance Corporation of India, Asset Management Arm and Nippon Life India Asset Management Limited are the second and third largest shareholders.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Indian Railway Catering & Tourism

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Indian Railway Catering & Tourism. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Indian Railway Catering & Tourism you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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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