Could The Siyaram Silk Mills Limited (NSE:SIYSIL) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
April 14, 2021
NSEI:SIYSIL

Every investor in Siyaram Silk Mills Limited (NSE:SIYSIL) should be aware of the most powerful shareholder groups. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Siyaram Silk Mills is a smaller company with a market capitalization of ₹8.9b, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Siyaram Silk Mills.

See our latest analysis for Siyaram Silk Mills

ownership-breakdown
NSEI:SIYSIL Ownership Breakdown April 14th 2021

What Does The Institutional Ownership Tell Us About Siyaram Silk Mills?

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.

We can see that Siyaram Silk Mills does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Siyaram Silk Mills, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NSEI:SIYSIL Earnings and Revenue Growth April 14th 2021

We note that hedge funds don't have a meaningful investment in Siyaram Silk Mills. Looking at our data, we can see that the largest shareholder is PKP Enterprises LLP with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.3% and 8.9%, of the shares outstanding, respectively. Rameshkumar Poddar, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

On looking further, we found that 50% 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.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Siyaram Silk Mills

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 a reasonable proportion of Siyaram Silk Mills Limited. Insiders have a ₹4.2b stake in this ₹8.9b business. 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

The general public, with a 14% stake in the company, will not 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.

Private Company Ownership

Our data indicates that Private Companies hold 24%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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 2 warning signs we've spotted with Siyaram Silk Mills .

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. 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.
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