Institutions along with state or government who hold considerable shares inSteel Authority of India Limited (NSE:SAIL) come under pressure; lose 3.4% of holdings value

Key Insights

• Significant control over Steel Authority of India by state or government implies that the general public has more power to influence management and governance-related decisions
• India owns 65% of the company
• 19% of Steel Authority of India is held by Institutions

To get a sense of who is truly in control of Steel Authority of India Limited (NSE:SAIL), it is important to understand the ownership structure of the business. We can see that state or government own the lion's share in the company with 65% 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 state or government took a hit after last week’s 3.4% price drop, institutions with their 19% holdings also suffered.

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

Check out our latest analysis for Steel Authority of India

What Does The Institutional Ownership Tell Us About Steel Authority of India?

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.

As you can see, institutional investors have a fair amount of stake in Steel Authority of 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. 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 Steel Authority of India, (below). Of course, keep in mind that there are other factors to consider, too.

Steel Authority of India is not owned by hedge funds. The company's largest shareholder is India, with ownership of 65%. This implies that they have majority interest control of the future of the company. With 9.1% and 3.0% of the shares outstanding respectively, Life Insurance Corporation of India, Asset Management Arm and quant Money Managers Ltd. are the second and third largest shareholders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Steel Authority of India

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.

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 most recent data indicates that insiders own less than 1% of Steel Authority of India Limited. 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 ₹523m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Steel Authority of India. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Steel Authority of India is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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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.