M M Forgings Limited's (NSE:MMFL) market cap increased by ₹1.6b, insiders receive a 42% cut

Key Insights

• M M Forgings' significant insider ownership suggests inherent interests in company's expansion
• 57% of the business is held by the top 4 shareholders
• Institutional ownership in M M Forgings is 19%

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A look at the shareholders of M M Forgings Limited (NSE:MMFL) can tell us which group is most powerful. With 42% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by ₹1.6b last week.

In the chart below, we zoom in on the different ownership groups of M M Forgings.

View our latest analysis for M M Forgings

What Does The Institutional Ownership Tell Us About M M Forgings?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in M M Forgings. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at M M Forgings' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in M M Forgings. Our data shows that Symax Consultants & Trading Pvt. Ltd. is the largest shareholder with 24% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 11% of the stock. Interestingly, the bottom two of the top three shareholders also hold the title of Co-Chief Executive Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

Our research also brought to light the fact that roughly 57% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of M M Forgings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders maintain a significant holding in M M Forgings Limited. Insiders have a ₹7.1b stake in this ₹17b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't 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

Our data indicates that Private Companies hold 28%, 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 M M Forgings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with M M Forgings (including 1 which shouldn't be ignored) .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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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.