Following a 80% decline over last year, recent gains may please Azure Power Global Limited (NYSE:AZRE) institutional owners
Key Insights
Given the large stake in the stock by institutions, Azure Power Global's stock price might be vulnerable to their trading decisions
53% of the company is held by a single shareholder (Caisse de dépôt et placement du Québec)
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
A look at the shareholders of Azure Power Global Limited (NYSE:AZRE) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 88% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors would probably welcome last week's 13% increase in share prices after a year of 80% losses as a sign that returns are likely to begin trending higher.
In the chart below, we zoom in on the different ownership groups of Azure Power Global.
Check out our latest analysis for Azure Power Global
What Does The Institutional Ownership Tell Us About Azure Power Global?
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.
Azure Power Global already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Azure Power Global, (below). Of course, keep in mind that there are other factors to consider, too.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Azure Power Global is not owned by hedge funds. The company's largest shareholder is Caisse de dépôt et placement du Québec, with ownership of 53%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. OMERS Administration Corporation is the second largest shareholder owning 21% of common stock, and Swedbank Robur Fonder AB holds about 3.2% of the company stock.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Azure Power Global
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our data suggests that insiders own under 1% of Azure Power Global Limited in their own names. It appears that the board holds about US$161k worth of stock. This compares to a market capitalization of US$168m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 12% stake in Azure Power Global. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Azure Power Global , and understanding them should be part of your investment process.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
