Institutional owners may consider drastic measures as Balrampur Chini Mills Limited's (NSE:BALRAMCHIN) recent ₹6.9b drop adds to long-term losses

Key Insights

• Given the large stake in the stock by institutions, Balrampur Chini Mills' stock price might be vulnerable to their trading decisions
• 51% of the business is held by the top 6 shareholders
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

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To get a sense of who is truly in control of Balrampur Chini Mills Limited (NSE:BALRAMCHIN), it is important to understand the ownership structure of the business. With 43% stake, institutions 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.

And institutional investors saw their holdings value drop by 6.1% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 4.2% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Balrampur Chini Mills, which might have negative implications on individual investors.

In the chart below, we zoom in on the different ownership groups of Balrampur Chini Mills.

See our latest analysis for Balrampur Chini Mills

What Does The Institutional Ownership Tell Us About Balrampur Chini 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.

Balrampur Chini Mills already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Balrampur Chini Mills' earnings history below. Of course, the future is what really matters.

Balrampur Chini Mills is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Saraogi Family Trust with 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.9% and 5.6%, of the shares outstanding, respectively. In addition, we found that Vivek Saraogi, the CEO has 5.4% of the shares allocated to their name.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. 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 Balrampur Chini Mills

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.

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 some shares in Balrampur Chini Mills Limited. The insiders have a meaningful stake worth ₹7.4b. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Balrampur Chini Mills. 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.

Private Company Ownership

Our data indicates that Private Companies hold 34%, 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. Take risks for example - Balrampur Chini Mills has 2 warning signs (and 1 which is a bit concerning) we think 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.