With a 68% stake, Premier Energies Limited (NSE:PREMIERENE) insiders have a lot riding on the company

Key Insights

• Significant insider control over Premier Energies implies vested interests in company growth
• 58% of the company is held by a single shareholder (Chiranjeev Saluja)
• 14% of Premier Energies is held by Institutions

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Every investor in Premier Energies Limited (NSE:PREMIERENE) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Premier Energies.

View our latest analysis for Premier Energies

What Does The Institutional Ownership Tell Us About Premier Energies?

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.

Premier Energies already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Premier Energies' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Premier Energies. The company's CEO Chiranjeev Saluja is the largest shareholder with 58% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. Meanwhile, the second and third largest shareholders, hold 5.5% and 4.6%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Surender Pal Saluja is also a Chairman of the Board, again, indicating strong insider ownership amongst the company's top 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Premier Energies

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. 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.

Our most recent data indicates that insiders own the majority of Premier Energies Limited. This means they can collectively make decisions for the company. Given it has a market cap of ₹442b, that means insiders have a whopping ₹300b worth of shares in their own names. 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 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Premier Energies. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 5.5%, private equity firms could influence the Premier Energies board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Premier Energies you should know about.

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.