ABB India Limited's (NSE:ABB) market cap dropped ₹47b last week; Public companies bore the brunt
Key Insights
- The considerable ownership by public companies in ABB India indicates that they collectively have a greater say in management and business strategy
- ABB Ltd owns 75% of the company
- Institutions own 10% of ABB India
A look at the shareholders of ABB India Limited (NSE:ABB) can tell us which group is most powerful. We can see that public companies own the lion's share in the company with 75% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And following last week's 4.3% decline in share price, public companies suffered the most losses.
Let's delve deeper into each type of owner of ABB India, beginning with the chart below.
See our latest analysis for ABB India
What Does The Institutional Ownership Tell Us About ABB India?
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 ABB India does have institutional investors; and they hold a good portion of the company's stock. 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. 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 ABB India, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in ABB India. Our data shows that ABB Ltd is the largest shareholder with 75% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 1.2% and 1.1% of the shares outstanding respectively, ICICI Prudential Asset Management Company Limited and BlackRock, Inc. are the second and third largest shareholders.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of ABB India
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.
General Public Ownership
With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ABB India. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Public Company Ownership
It appears to us that public companies own 75% of ABB India. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand ABB India better, we need to consider many other factors. For example, we've discovered 1 warning sign for ABB India that you should be aware of before investing here.
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.
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.