Retail investors are Rain Industries Limited's (NSE:RAIN) biggest owners and were hit after market cap dropped ₹4.6b

Key Insights

• Rain Industries' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 11 investors have a majority stake in the company with 51% ownership
• 28% of Rain Industries is held by insiders

To get a sense of who is truly in control of Rain Industries Limited (NSE:RAIN), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 41% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of retail investors took a hit after last week’s 8.0% price drop, insiders with their 28% also suffered.

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

Check out our latest analysis for Rain Industries

What Does The Institutional Ownership Tell Us About Rain Industries?

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.

We can see that Rain Industries does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Rain Industries, (below). Of course, keep in mind that there are other factors to consider, too.

Rain Industries is not owned by hedge funds. With a 14% stake, CEO N. Reddy is the largest shareholder. With 8.1% and 7.5% of the shares outstanding respectively, Nellore Anupama Reddy and Focus India Brands Private Limited are the second and third largest shareholders.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Rain Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Rain Industries Limited. It has a market capitalization of just ₹53b, and insiders have ₹15b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 41% stake in Rain Industries. 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

We can see that Private Companies own 16%, of the shares on issue. 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. Take risks for example - Rain Industries has 3 warning signs (and 2 which can't be ignored) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.