Aditya Birla Real Estate Limited's (NSE:ABREL) market cap dropped ₹20b last week; individual investors who hold 35% were hit as were institutions

Key Insights

• The considerable ownership by public companies in Aditya Birla Real Estate indicates that they collectively have a greater say in management and business strategy
• 53% of the business is held by the top 4 shareholders
• 29% of Aditya Birla Real Estate is held by Institutions

Every investor in Aditya Birla Real Estate Limited (NSE:ABREL) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 35% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 29% came under pressure after market cap dropped to ₹231b last week,public companies took the most losses.

Let's delve deeper into each type of owner of Aditya Birla Real Estate, beginning with the chart below.

View our latest analysis for Aditya Birla Real Estate

What Does The Institutional Ownership Tell Us About Aditya Birla Real Estate?

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.

We can see that Aditya Birla Real Estate 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 Aditya Birla Real Estate, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Aditya Birla Real Estate. Pilani Investment and Industries Corporation Limited is currently the largest shareholder, with 33% of shares outstanding. With 10.0% and 6.8% of the shares outstanding respectively, IGH Holdings Private Limited and Birla Group Holdings Private Limited, Asset Management Arm are the second and third largest shareholders.

Our research also brought to light the fact that roughly 53% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. 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 Aditya Birla Real Estate

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Aditya Birla Real Estate Limited. The insiders have a meaningful stake worth ₹4.3b. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Aditya Birla Real Estate. 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

It seems that Private Companies own 10%, of the Aditya Birla Real Estate stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

Public companies currently own 35% of Aditya Birla Real Estate 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Aditya Birla Real Estate (at least 1 which doesn't sit too well with us) , and understanding them should be part of your investment process.

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. 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.