Every investor in PSP Projects Limited (NSE: PSPPROJECT) needs to know the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares of small companies. I like to see at least a little insider ownership. As Charlie Munger said, “Show me the motivation and I’ll show you the result.
PSP Projects is not a large company by global standards. It has a market cap of ₹ 14 billion which means it wouldn’t get the attention of many institutional investors. Looking at our data on ownership groups (below), it appears that institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about the PSP Projects.
See our latest analysis for PSP projects
What does institutional ownership tell us about PSP projects?
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. You would expect most businesses to have institutions listed, especially if they are growing.
PSP Projects already has institutions on the share register. Indeed, they hold a respectable stake in the company. This suggests some credibility among professional investors. But we cannot rely on this fact alone since institutions sometimes make bad investments, as everyone else does. If multiple institutions change their perspective on a stock at the same time, you could see the stock price drop quickly. So it’s worth looking at the PSP Projects revenue history below. Of course, it’s the future that really matters.
Hedge funds don’t have a lot of stake in PSP projects. With a 51% stake, CEO Prahaladbhai Patel is the largest shareholder. This implies that they own majority interests and exercise significant control over the company. Investors generally consider it a good sign when the management of the company has such a strong interest, as it is widely seen to increase the chances that management will act in the best interest of the company. Meanwhile, the second and third largest shareholders hold 14% and 5.6%, respectively, of the outstanding shares. Interestingly, the third largest shareholder, Sagar Patel, is also a member of the board, again, indicating strong insider ownership among the major shareholders of the company.
While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand the expected performance of a stock. While there is some analyst coverage, the company is probably not widely covered. So that might get more attention, on the track.
Insider ownership of PSP projects
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company responds to the board and the board must represent the interests of the shareholders. Notably, sometimes the senior executives are themselves part of the board of directors.
I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own the majority of PSP Projects Limited. This means that they can collectively make decisions for the business. Considering that it has a market cap of ₹ 14 billion, that means they own shares worth ₹ 11 billion. Most would be happy to see the board invest alongside them. You may wish to discover (free) whether they bought or sold.
General public property
The general public, with a 15% stake in the company, will not be easily ignored. While this group may not necessarily get it right, it can certainly have a real influence on the way the business is run.
Private company ownership
Our data indicates that private companies own 3.4% of the company’s shares. 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 an individual. Although it is difficult to draw general conclusions, it should be noted as an additional area of research.
I find it very interesting to see who exactly owns a company. But to really understand better, we have to take other information into account as well. For example, we discovered 2 warning signs for PSP projects which you should be aware of before investing here.
If you’re like me, you might want to think about how to grow or shrink this business. Fortunately, you can check out this free report showing analysts’ forecasts for its future.
NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month in which the balance sheet is dated. This may not be consistent with figures in annual reports.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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