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Could The IL&FS Engineering and Construction Company Limited (NSE:IL&FSENGG) Ownership Structure Tell Us Something Useful?

Simply Wall St

If you want to know who really controls IL&FS Engineering and Construction Company Limited (NSE:IL&FSENGG), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. We also tend to see lower insider ownership in companies that were previously publicly owned.

IL&FS Engineering and Construction is not a large company by global standards. It has a market capitalization of ₹838m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about IL&FSENGG.

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View our latest analysis for IL&FS Engineering and Construction

NSEI:IL&FSENGG Ownership Summary, May 24th 2019

What Does The Institutional Ownership Tell Us About IL&FS Engineering and Construction?

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. We would expect most companies to have some institutions on the register, especially if they are growing.

IL&FS Engineering and Construction already has institutions on the share registry. Indeed, they own 6.7% of the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 IL&FS Engineering and Construction's earnings history, below. Of course, the future is what really matters.

NSEI:IL&FSENGG Income Statement, May 24th 2019

We note that hedge funds don't have a meaningful investment in IL&FS Engineering and Construction. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of IL&FS Engineering and Construction

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

I can report that insiders do own shares in IL&FS Engineering and Construction Company Limited. In their own names, insiders own ₹14m worth of stock in the ₹838m company. It is good to see some investment by insiders, but I usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public holds a 13% stake in IL&FSENGG. 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.

Private Company Ownership

We can see that Private Companies own 78%, of the shares on issue. 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:

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.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.