State or government in Tamil Nadu Newsprint and Papers Limited (NSE:TNPL) are its biggest bettors, and their bets paid off as stock gained 10% last week

Key Insights

• The considerable ownership by state or government in Tamil Nadu Newsprint and Papers indicates that they collectively have a greater say in management and business strategy
• The top 5 shareholders own 53% of the company
• 17% of Tamil Nadu Newsprint and Papers is held by Institutions

To get a sense of who is truly in control of Tamil Nadu Newsprint and Papers Limited (NSE:TNPL), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 40% to be precise, is state or government. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, state or government benefitted the most after the company's market cap rose by ₹2.1b last week.

In the chart below, we zoom in on the different ownership groups of Tamil Nadu Newsprint and Papers.

See our latest analysis for Tamil Nadu Newsprint and Papers

What Does The Institutional Ownership Tell Us About Tamil Nadu Newsprint and Papers?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Tamil Nadu Newsprint and Papers 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. 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 Tamil Nadu Newsprint and Papers' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Tamil Nadu Newsprint and Papers. Government of Tamil Nadu is currently the company's largest shareholder with 35% of shares outstanding. For context, the second largest shareholder holds about 7.0% of the shares outstanding, followed by an ownership of 3.7% by the third-largest shareholder.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Tamil Nadu Newsprint and Papers

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.

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.

We can report that insiders do own shares in Tamil Nadu Newsprint and Papers Limited. It has a market capitalization of just ₹22b, and insiders have ₹1.1b worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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

It seems that Private Companies own 8.8%, of the Tamil Nadu Newsprint and Papers stock. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Tamil Nadu Newsprint and Papers better, we need to consider many other factors. Be aware that Tamil Nadu Newsprint and Papers is showing 2 warning signs in our investment analysis , 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.