Every investor in Emami Paper Mills Limited (NSE: EMAMIPAP) should know the most powerful shareholder groups. Insiders often own a large portion of younger, smaller companies, while larger companies tend to have institutions as shareholders. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.
Emami Paper Mills is not a big company by world standards. It has a market capitalization of ₹10.0 billion, which means it would not get the attention of many institutional investors. Looking at our ownership group data (below), it appears that institutions are visible on the share register. We can zoom in on the different ownership groups, to learn more about Emami Paper Mills.
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What does institutional ownership tell us about Emami paper mills?
Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.
We can see that Emami Paper Mills has institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it is worth checking out the earnings history of Emami Paper Mills below. Of course, the future is what really matters.
Hedge funds do not have many shares in Emami Paper Mills. Sneha Enclave Private Limited is currently the company’s largest shareholder with 28% of the shares outstanding. For context, the second shareholder owns approximately 24% of the outstanding shares, followed by a 13% ownership by the third shareholder.
To make our study more interesting, we found that the top 2 shareholders hold a majority stake in the company, which means they are powerful enough to influence company decisions.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. We don’t see any analyst coverage of the stock at this time, so the company is unlikely to be widely held.
Insider ownership of Emami Paper Mills
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
We may report that insiders hold shares in Emami Paper Mills Limited. As individuals, insiders collectively own ₹953 million worth of the ₹10.0 billion company. Some would say this shows the alignment of interests between shareholders and the board, although we generally prefer to see larger insider participations. But it might be worth checking to see if these insiders have sold.
General public property
The general public, including retail investors, owns 11% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
Private Company Ownership
We can see that private companies hold 58% of the shares issued. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.
Ownership of a public company
We understand that state-owned companies own 13% of Emami Paper Mills. We cannot be sure, but it is quite possible that it is a strategic issue. Businesses can be similar or work together.
While it is worth considering the different groups that own a business, there are other, even more important factors. To do this, you need to find out about the 3 warning signs we spotted with Emami Paper Mills (including 1 which is concerning).
Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of interesting companies.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.