Nasdaq
华尔街日报Rico Auto Industries Limited's (NSE:RICOAUTO) market cap dropped ₹2.5b last week; Individual investors bore the brunt
Key Insights
- Rico Auto Industries' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
- A total of 13 investors have a majority stake in the company with 48% ownership
- 17% of Rico Auto Industries is held by insiders
A look at the shareholders of Rico Auto Industries Limited (NSE:RICOAUTO) can tell us which group is most powerful. With 52% stake, individual investors 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).
And following last week's 15% decline in share price, individual investors suffered the most losses.
In the chart below, we zoom in on the different ownership groups of Rico Auto Industries.
Check out our latest analysis for Rico Auto Industries
What Does The Lack Of Institutional Ownership Tell Us About Rico Auto Industries?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Rico Auto Industries, for yourself, below.
We note that hedge funds don't have a meaningful investment in Rico Auto Industries. Asn Manufacturing And Services Private Limited is currently the company's largest shareholder with 15% of shares outstanding. With 11% and 8.7% of the shares outstanding respectively, Arvind Kapur and Meraki Manufacturing And Finvest Advisors Pvt Ltd are the second and third largest shareholders. Arvind Kapur, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
On studying our ownership data, we found that 13 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Rico Auto Industries
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.
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.
It seems insiders own a significant proportion of Rico Auto Industries Limited. It has a market capitalization of just ₹14b, and insiders have ₹2.4b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public -- including retail investors -- own 52% of Rico Auto Industries. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Private Company Ownership
It seems that Private Companies own 30%, of the Rico Auto Industries stock. 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:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Rico Auto Industries (of which 1 can't be ignored!) you should know about.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
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.