Stock Analysis

The Ramco Cements Limited's (NSE:RAMCOCEM) recent 3.6% pullback adds to one-year year losses, institutional owners may take drastic measures

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NSEI:RAMCOCEM
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Key Insights

  • Given the large stake in the stock by institutions, Ramco Cements' stock price might be vulnerable to their trading decisions
  • The top 4 shareholders own 50% of the company
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of The Ramco Cements Limited (NSE:RAMCOCEM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors endured the highest losses after the company's share price fell by 3.6% last week. The recent loss, which adds to a one-year loss of 4.2% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Ramco Cements which might hurt individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Ramco Cements.

View our latest analysis for Ramco Cements

ownership-breakdown
NSEI:RAMCOCEM Ownership Breakdown March 16th 2023

What Does The Institutional Ownership Tell Us About Ramco Cements?

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.

Ramco Cements 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. 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 Ramco Cements, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NSEI:RAMCOCEM Earnings and Revenue Growth March 16th 2023

Ramco Cements is not owned by hedge funds. Our data shows that Ramco Industries Limited is the largest shareholder with 21% of shares outstanding. Rajapalayam Mills Limited is the second largest shareholder owning 14% of common stock, and Life Insurance Corporation of India, Asset Management Arm holds about 8.7% of the company stock.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Ramco Cements

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

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Shareholders would probably be interested to learn that insiders own shares in The Ramco Cements Limited. This is a big company, so it is good to see this level of alignment. Insiders own ₹5.4b worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ramco Cements. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 4.0%, 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 35% of Ramco Cements stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Ramco Cements (1 is a bit unpleasant!) 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.

Valuation is complex, but we're helping make it simple.

Find out whether Ramco Cements is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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