State or government are RITES Limited's (NSE:RITES) biggest owners and were rewarded after market cap rose by ₹11b last week

Key Insights

• The considerable ownership by state or government in RITES indicates that they collectively have a greater say in management and business strategy
• 72% of the company is held by a single shareholder (India)
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

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A look at the shareholders of RITES Limited (NSE:RITES) can tell us which group is most powerful. The group holding the most number of shares in the company, around 72% to be precise, is state or government. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, state or government collectively scored the highest last week as the company hit ₹145b market cap following a 8.2% gain in the stock.

In the chart below, we zoom in on the different ownership groups of RITES.

Check out our latest analysis for RITES

What Does The Institutional Ownership Tell Us About RITES?

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.

RITES already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at RITES' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in RITES. The company's largest shareholder is India, with ownership of 72%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 5.5% and 2.0% 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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of RITES

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public-- including retail investors -- own 18% 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:

It's always worth thinking about the different groups who own shares in a company. But to understand RITES better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for RITES you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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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.