A look at the shareholders of Indiabulls Real Estate Limited (NSE:IBREALEST) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Companies that have been privatized tend to have low insider ownership.
Indiabulls Real Estate is a smaller company with a market capitalization of ₹47b, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have bought into the company. Let’s delve deeper into each type of owner, to discover more about Indiabulls Real Estate.
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What Does The Institutional Ownership Tell Us About Indiabulls Real Estate?
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.
Indiabulls Real Estate already has institutions on the share registry. Indeed, they own 35% of 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. 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 Indiabulls Real Estate, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in Indiabulls Real Estate. Our data shows that Embassy Property Developments Private Limited is the largest shareholder with 14% of shares outstanding. With 12% and 9.6% of the shares outstanding respectively, Morgan Stanley, Investment Banking and Brokerage Investments and Sg Infralands Private Limited are the second and third largest shareholders.
We also observed that the top 7 shareholders account for 52% of the register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Indiabulls Real Estate
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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Shareholders would probably be interested to learn that insiders own shares in Indiabulls Real Estate Limited. In their own names, insiders own ₹1.3b worth of stock in the ₹47b company. 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 21% 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.
Private Company Ownership
We can see that Private Companies own 42%, of the shares on issue. It’s hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we’ve identified 3 warning signs for Indiabulls Real Estate (1 is a bit concerning) that you should be aware of.
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.
[“source=simplywall”]
