Stock Analysis

Chambal Fertilisers and Chemicals Limited's (NSE:CHAMBLFERT) last week's 4.2% decline must have disappointed private companies who have a significant stake

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Key Insights

  • Chambal Fertilisers and Chemicals' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
  • A total of 6 investors have a majority stake in the company with 51% ownership
  • Insiders have sold recently

To get a sense of who is truly in control of Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT), it is important to understand the ownership structure of the business. With 33% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by ₹5.0b.

Let's take a closer look to see what the different types of shareholders can tell us about Chambal Fertilisers and Chemicals.

View our latest analysis for Chambal Fertilisers and Chemicals

NSEI:CHAMBLFERT Ownership Breakdown March 19th 2023

What Does The Institutional Ownership Tell Us About Chambal Fertilisers and Chemicals?

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 Chambal Fertilisers and Chemicals 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 Chambal Fertilisers and Chemicals, (below). Of course, keep in mind that there are other factors to consider, too.

NSEI:CHAMBLFERT Earnings and Revenue Growth March 19th 2023

Hedge funds don't have many shares in Chambal Fertilisers and Chemicals. Zuari Industries Limited is currently the largest shareholder, with 15% of shares outstanding. The Hindustan Times Limited is the second largest shareholder owning 14% of common stock, and SIL Investments Limited holds about 8.8% of the company stock.

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 Chambal Fertilisers and Chemicals

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 Chambal Fertilisers and Chemicals Limited. This is a big company, so it is good to see this level of alignment. Insiders own ₹3.5b worth of shares (at current prices). 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

The general public, who are usually individual investors, hold a 17% stake in Chambal Fertilisers and Chemicals. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 33%, 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.

Public Company Ownership

It appears to us that public companies own 24% of Chambal Fertilisers and Chemicals. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Chambal Fertilisers and Chemicals (1 is a bit concerning) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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