Insiders continue to buy Star Cement Limited (NSE:STARCEMENT) and now own 60% shares

Key Insights

• Insiders appear to have a vested interest in Star Cement's growth, as seen by their sizeable ownership
• A total of 8 investors have a majority stake in the company with 52% ownership
• Insiders have been buying lately

If you want to know who really controls Star Cement Limited (NSE:STARCEMENT), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 60% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

A quick look at our data suggests that insiders have been buying shares in the company recently and their bets paid off last week after the stock gained 4.8%.

In the chart below, we zoom in on the different ownership groups of Star Cement.

View our latest analysis for Star Cement

What Does The Institutional Ownership Tell Us About Star Cement?

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 Star Cement. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Star Cement's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Star Cement. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Star Cement's case, its Top Key Executive, Sajjan Bhajanka, is the largest shareholder, holding 12% of shares outstanding. Prem Bhajanka is the second largest shareholder owning 10% of common stock, and SBI Funds Management Limited holds about 6.0% of the company stock. Interestingly, the second-largest shareholder, Prem Bhajanka is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Star Cement

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 that insiders own more than half the Star Cement Limited stock. This gives them a lot of power. That means insiders have a very meaningful ₹58b stake in this ₹96b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Star Cement. 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

It seems that Private Companies own 15%, of the Star Cement stock. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Star Cement better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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.

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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.