Is E.I.D.- Parry (India) Limited's (NSE:EIDPARRY) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
January 05, 2022
NSEI:EIDPARRY
Source: Shutterstock

A look at the shareholders of E.I.D.- Parry (India) Limited (NSE:EIDPARRY) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

E.I.D.- Parry (India) has a market capitalization of ₹89b, so we would expect some institutional investors to have noticed the stock. In the chart below, we can see that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about E.I.D.- Parry (India).

View our latest analysis for E.I.D.- Parry (India)

ownership-breakdown
NSEI:EIDPARRY Ownership Breakdown January 5th 2022

What Does The Institutional Ownership Tell Us About E.I.D.- Parry (India)?

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.

As you can see, institutional investors have a fair amount of stake in E.I.D.- Parry (India). This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see E.I.D.- Parry (India)'s historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NSEI:EIDPARRY Earnings and Revenue Growth January 5th 2022

We note that hedge funds don't have a meaningful investment in E.I.D.- Parry (India). Looking at our data, we can see that the largest shareholder is Murugappa Group Ltd. with 41% of shares outstanding. For context, the second largest shareholder holds about 3.5% of the shares outstanding, followed by an ownership of 2.1% by the third-largest shareholder.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of E.I.D.- Parry (India)

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

Our information suggests that insiders maintain a significant holding in E.I.D.- Parry (India) Limited. It has a market capitalization of just ₹89b, and insiders have ₹12b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. 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

It seems that Private Companies own 44%, of the E.I.D.- Parry (India) stock. 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:

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 example, we've discovered 3 warning signs for E.I.D.- Parry (India) that you should be aware of before investing here.

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.

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