While institutions own 19% of Prestige Estates Projects Limited (NSE:PRESTIGE), private companies are its largest shareholders with 59% ownership

By
Simply Wall St
Published
January 12, 2022
NSEI:PRESTIGE
Source: Shutterstock

Every investor in Prestige Estates Projects Limited (NSE:PRESTIGE) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Meanwhile, institutions make up 19% of the company’s shareholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

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

See our latest analysis for Prestige Estates Projects

ownership-breakdown
NSEI:PRESTIGE Ownership Breakdown January 12th 2022

What Does The Institutional Ownership Tell Us About Prestige Estates Projects?

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 Prestige Estates Projects does have institutional investors; and they hold a good portion of the company's stock. 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 Prestige Estates Projects' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NSEI:PRESTIGE Earnings and Revenue Growth January 12th 2022

We note that hedge funds don't have a meaningful investment in Prestige Estates Projects. Razack Family Trust is currently the largest shareholder, with 56% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 4.3% and 2.3%, of the shares outstanding, respectively. Rezwan Razack, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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 Prestige Estates Projects

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can report that insiders do own shares in Prestige Estates Projects Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around ₹17b worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 11% 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

We can see that Private Companies own 59%, of the shares on issue. 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 Prestige Estates Projects better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Prestige Estates Projects (of which 1 is a bit concerning!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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