Stock Analysis

Premier Explosives Limited's (NSE:PREMEXPLN) market cap increased by ₹5.7b, insiders receive a 57% cut

NSEI:PREMEXPLN
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Key Insights

Every investor in Premier Explosives Limited (NSE:PREMEXPLN) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 26% gain.

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

View our latest analysis for Premier Explosives

ownership-breakdown
NSEI:PREMEXPLN Ownership Breakdown April 28th 2024

What Does The Institutional Ownership Tell Us About Premier Explosives?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Premier Explosives already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Premier Explosives' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NSEI:PREMEXPLN Earnings and Revenue Growth April 28th 2024

Premier Explosives is not owned by hedge funds. Amarnath Gupta is currently the largest shareholder, with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 9.2%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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 Premier Explosives

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

It seems that insiders own more than half the Premier Explosives Limited stock. This gives them a lot of power. That means they own ₹16b worth of shares in the ₹28b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Premier Explosives. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Premier Explosives , and understanding them should be part of your investment process.

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.

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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.

About NSEI:PREMEXPLN

Premier Explosives

Manufactures and sells high energy materials and allied products in India and internationally.

Adequate balance sheet with acceptable track record.