Painful week for individual investors invested in Gujarat Narmada Valley Fertilizers & Chemicals Limited (NSE:GNFC) after 4.6% drop, institutions also suffered losses

Key Insights

• The considerable ownership by individual investors in Gujarat Narmada Valley Fertilizers & Chemicals indicates that they collectively have a greater say in management and business strategy
• 54% of the business is held by the top 4 shareholders
• 28% of Gujarat Narmada Valley Fertilizers & Chemicals is held by Institutions

If you want to know who really controls Gujarat Narmada Valley Fertilizers & Chemicals Limited (NSE:GNFC), then you'll have to look at the makeup of its share registry. With 29% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of individual investors took a hit after last week’s 4.6% price drop, institutions with their 28% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Gujarat Narmada Valley Fertilizers & Chemicals.

Check out our latest analysis for Gujarat Narmada Valley Fertilizers & Chemicals

What Does The Institutional Ownership Tell Us About Gujarat Narmada Valley Fertilizers & 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 Gujarat Narmada Valley Fertilizers & 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 Gujarat Narmada Valley Fertilizers & Chemicals, (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 Gujarat Narmada Valley Fertilizers & Chemicals. Looking at our data, we can see that the largest shareholder is Gujarat State Investments Limited with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 7.3%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Gujarat Narmada Valley Fertilizers & 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of Gujarat Narmada Valley Fertilizers & Chemicals Limited in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₹47k worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in Gujarat Narmada Valley Fertilizers & Chemicals. 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 21%, of the company's shares. 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

It appears to us that public companies own 20% of Gujarat Narmada Valley Fertilizers & 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Gujarat Narmada Valley Fertilizers & Chemicals you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.