While institutions own 29% of Petronet LNG Limited (NSE:PETRONET), public companies are its largest shareholders with 50% ownership

Key Insights

• Significant control over Petronet LNG by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 4 shareholders own 50% of the company
• Institutions own 29% of Petronet LNG

Every investor in Petronet LNG Limited (NSE:PETRONET) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 50% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, institutions make up 29% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

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

Check out our latest analysis for Petronet LNG

What Does The Institutional Ownership Tell Us About Petronet LNG?

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 Petronet LNG 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. 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 Petronet LNG's earnings history below. Of course, the future is what really matters.

Petronet LNG is not owned by hedge funds. Oil and Natural Gas Corporation Limited is currently the company's largest shareholder with 13% of shares outstanding. The second and third largest shareholders are Bharat Petroleum Corporation Limited and GAIL (India) Limited, with an equal amount of shares to their name at 13%.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Petronet LNG

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 data suggests that insiders own under 1% of Petronet LNG Limited in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₹2.1m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

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

Public Company Ownership

Public companies currently own 50% of Petronet LNG stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Petronet LNG better, we need to consider many other factors. Be aware that Petronet LNG is showing 1 warning sign in our investment analysis , 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.