The big shareholder groups in Reliance Infrastructure Limited (NSE:RELINFRA) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.
Reliance Infrastructure is not a large company by global standards. It has a market capitalization of ₹5.6b, which means it wouldn't have the attention 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 Reliance Infrastructure.
What Does The Institutional Ownership Tell Us About Reliance Infrastructure?
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 Reliance Infrastructure does have institutional investors; and they hold 41% of the stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Reliance Infrastructure, (below). Of course, keep in mind that there are other factors to consider, too.
Reliance Infrastructure is not owned by hedge funds. Reliance - ADA Group Limited is currently the company's largest shareholder with 11% of shares outstanding. The second largest shareholder with 8.5%, is Housing Development Finance Corporation Limited, Asset Management Arm, followed by Brandes Investment Partners, L.P., with an ownership of 5.1%.
Further, we can found that 50% of the ownership is controlled by the top 13 shareholders, meaning that no one shareholder has a majority interest in the ownership.
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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Reliance Infrastructure
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Our information suggests that Reliance Infrastructure Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It has a market capitalization of just ₹5.6b, and the board has only ₹15m worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.
General Public Ownership
The general public, with a 45% stake in the company, will not easily be ignored. 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 Company Ownership
We can see that Private Companies own 12%, 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.
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 5 warning signs for Reliance Infrastructure you should be aware of, and 2 of them are concerning.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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