What Is The Ownership Structure Like For Jaiprakash Power Ventures Limited (NSE:JPPOWER)?

By
Simply Wall St
Published
June 13, 2021
NSEI:JPPOWER

The big shareholder groups in Jaiprakash Power Ventures Limited (NSE:JPPOWER) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Jaiprakash Power Ventures is a smaller company with a market capitalization of ₹34b, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Jaiprakash Power Ventures.

Check out our latest analysis for Jaiprakash Power Ventures

ownership-breakdown
NSEI:JPPOWER Ownership Breakdown June 14th 2021

What Does The Institutional Ownership Tell Us About Jaiprakash Power Ventures?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Jaiprakash Power Ventures 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. 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 Jaiprakash Power Ventures' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NSEI:JPPOWER Earnings and Revenue Growth June 14th 2021

Hedge funds don't have many shares in Jaiprakash Power Ventures. Jaiprakash Associates Limited is currently the largest shareholder, with 26% of shares outstanding. ICICI Bank Ltd., Asset Management Arm is the second largest shareholder owning 10.0% of common stock, and Punjab National Bank, Asset Management Arm holds about 7.1% of the company stock.

Our research also brought to light the fact that roughly 53% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Jaiprakash Power Ventures

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 some shares in Jaiprakash Power Ventures Limited. It has a market capitalization of just ₹34b, and insiders have ₹1.7b worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, with a 19% stake in the company, will not 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.

Public Company Ownership

It appears to us that public companies own 31% of Jaiprakash Power Ventures. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Jaiprakash Power Ventures you should be aware of, and 1 of them makes us a bit uncomfortable.

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. 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.
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