The recent drop in prices must have disappointed ReNew Energy Global plc (NASDAQ:RNW) institutional investors who own 63% of the shares

By
Simply Wall St
Published
November 23, 2021
NasdaqGS:RNW
Source: Shutterstock

Every investor in ReNew Energy Global plc (NASDAQ:RNW) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 63% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 5.7% decline in share price, institutional suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about ReNew Energy Global.

View our latest analysis for ReNew Energy Global

ownership-breakdown
NasdaqGS:RNW Ownership Breakdown November 23rd 2021

What Does The Institutional Ownership Tell Us About ReNew Energy Global?

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.

As you can see, institutional investors have a fair amount of stake in ReNew Energy Global. 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. 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 ReNew Energy Global, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:RNW Earnings and Revenue Growth November 23rd 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. ReNew Energy Global is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Goldman Sachs Group, Investment Banking and Securities Investments with 38% of shares outstanding. Abu Dhabi Investment Authority is the second largest shareholder owning 15% of common stock, and Canada Pension Plan Investment Board holds about 12% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of ReNew Energy Global

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.

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 ReNew Energy Global plc. This is a big company, so it is good to see this level of alignment. Insiders own US$78m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in ReNew Energy Global. 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

Our data indicates that Private Companies hold 7.1%, of the company's shares. 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 ReNew Energy Global better, we need to consider many other factors. For instance, we've identified 1 warning sign for ReNew Energy Global that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.