Stock Analysis

The Andhra Sugars Limited's (NSE:ANDHRSUGAR) last week's 11% decline must have disappointed individual investors who have a significant stake

Source: Shutterstock

Key Insights

  • Significant control over Andhra Sugars by individual investors implies that the general public has more power to influence management and governance-related decisions
  • 48% of the business is held by the top 25 shareholders
  • Recent purchases by insiders

A look at the shareholders of The Andhra Sugars Limited (NSE:ANDHRSUGAR) can tell us which group is most powerful. With 52% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 43% shares weren’t spared from last week’s ₹1.9b market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Andhra Sugars, beginning with the chart below.

See our latest analysis for Andhra Sugars

NSEI:ANDHRSUGAR Ownership Breakdown March 18th 2023

What Does The Institutional Ownership Tell Us About Andhra Sugars?

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.

Since institutions own only a small portion of Andhra Sugars, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

NSEI:ANDHRSUGAR Earnings and Revenue Growth March 18th 2023

Andhra Sugars is not owned by hedge funds. With a 15% stake, CEO Pendyala Chowdary is the largest shareholder. For context, the second largest shareholder holds about 7.8% of the shares outstanding, followed by an ownership of 6.6% by the third-largest shareholder. Interestingly, the second and third-largest shareholders also happen to be the Co-Chief Executive Officer and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Andhra Sugars

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 The Andhra Sugars Limited. Insiders own ₹6.5b worth of shares in the ₹15b company. 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 -- including retail investors -- own 52% of Andhra Sugars. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 4.5%, of the Andhra Sugars stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

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

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Andhra Sugars is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis