Ramkrishna Forgings Limited's (NSE:RKFORGE) market cap dropped ₹21b last week; individual investors who hold 41% were hit as were institutions - Simply Wall St News

To get a sense of who is truly in control of Ramkrishna Forgings Limited (NSE:RKFORGE), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 41% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 28% came under pressure after market cap dropped to ₹164b last week,private companies took the most losses.

Let's delve deeper into each type of owner of Ramkrishna Forgings, beginning with the chart below.

Check out our latest analysis for Ramkrishna Forgings

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.

Ramkrishna Forgings already has institutions on the share registry. Indeed, they own a respectable stake in 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. 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 Ramkrishna Forgings, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ramkrishna Forgings. Riddhi Portfolio Private Limited is currently the company's largest shareholder with 33% of shares outstanding. With 6.7% and 3.6% of the shares outstanding respectively, Capital Research and Management Company and Ramkrishna Rail And Infrastructure Private Limited are the second and third largest shareholders. In addition, we found that Naresh Jalan, the CEO has 3.2% of the shares allocated to their name.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

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.

It seems insiders own a significant proportion of Ramkrishna Forgings Limited. Insiders own ₹20b worth of shares in the ₹164b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ramkrishna Forgings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

We can see that Private Companies own 41%, 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.

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Ramkrishna Forgings (1 can't be ignored!) that you should be aware of before investing here.

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.

Our new AI Stock Screener scans the market every day to uncover opportunities.

• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.

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.

Engages in the manufacture and sale of forged components for automobiles, railway wagons and coaches, and engineering parts in India and internationally.

Excellent balance sheet with proven track record.