Do Insiders Own Lots Of Shares In Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT)?

The big shareholder groups in Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

Chambal Fertilisers and Chemicals isn’t enormous, but it’s not particularly small either. It has a market capitalization of ₹67b, which means it would generally expect to see some institutions on the share registry. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about CHAMBLFERT.

See our latest analysis for Chambal Fertilisers and Chemicals

NSEI:CHAMBLFERT Ownership Summary, April 25th 2019
NSEI:CHAMBLFERT Ownership Summary, April 25th 2019

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

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 Chambal Fertilisers and Chemicals does have institutional investors; and they hold 21% of the 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 Income Statement, April 25th 2019
NSEI:CHAMBLFERT Income Statement, April 25th 2019

We note that hedge funds don’t have a meaningful investment in Chambal Fertilisers and Chemicals. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

I can report that insiders do own shares in Chambal Fertilisers and Chemicals Limited. As individuals, the insiders collectively own ₹4.1b worth of the ₹67b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public holds a 19% stake in CHAMBLFERT. 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 28%, of the company’s shares. 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.

Public Company Ownership

Public companies currently own 24% of CHAMBLFERT stock. 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:

It’s always worth thinking about the different groups who own shares in a company. But to understand Chambal Fertilisers and Chemicals better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.