After a 38% drop from a year ago, recent gains could please institutional owners of Mahanagar Gas Limited (NSE: MGL)
If you want to know who actually controls Mahanagar Gas Limited (NSE:MGL), then you will need to look at the composition of its share register. With 46% of the capital, the institutions hold the maximum number of shares in the company. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.
Last week’s ₹4.5bn market cap gain would likely be appreciated by institutional investors, especially after a year of 38% losses.
In the table below, we zoom in on the different ownership groups of Mahanagar Gas.
See our latest analysis for Mahanagar Gas
What does institutional ownership tell us about Mahanagar gas?
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.
We can see that Mahanagar Gas has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Mahanagar Gas’ historical revenue and earnings below, but keep in mind there’s always more to the story.
Hedge funds don’t have a lot of shares in Mahanagar Gas. Our data shows that GAIL (India) Limited is the largest shareholder with 32% of shares outstanding. For context, the second largest shareholder owns approximately 10.0% of the outstanding shares, followed by 7.0% ownership by the third largest shareholder.
Looking further, we found that 56% of the shares are held by the top 4 shareholders. In other words, these shareholders have a say in the decisions of the company.
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 Mahanagar Gas
The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.
Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.
We note that our data does not show any board members personally owning shares. It is unusual not to have at least some personal holdings of board members, so our data could be in error. A good next step would be to check how much the CEO gets paid.
General public property
With a 12% stake, the general public, consisting mainly of individual investors, has some influence over Mahanagar Gas. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.
Ownership of a public company
We can see that public companies own 32% of Mahanagar Gas outstanding shares. It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.
I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Consider the risks, for example. Every business has them, and we’ve spotted 2 warning signs for Mahanagar Gas you should know.
Sure this may not be the best stock to buy. So take a look at this free 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.