Who Are The Major Shareholders Of A2Z Infra Engineering Limited (NSE:A2ZINFRA)?

Blake Harford

Updated Thu, Mar 29, 2018, 10:15 PM

Today, I will be analyzing A2Z Infra Engineering Limited’s (NSEI:A2ZINFRA) recent ownership structure, an important but not-so-popular subject among individual investors. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, which is why we’ll take a moment to analyse A2ZINFRA’s shareholder registry.

Check out our latest analysis for A2Z Infra Engineering

NSEI:A2ZINFRA Ownership_summary Mar 30th 18

Institutional Ownership

With an institutional ownership of 11.38%, A2ZINFRA can face volatile stock price movements if institutions execute block trades on the open market, more so, when there are relatively small amounts of shares available on the market to trade Although A2ZINFRA has a high institutional ownership, such stock moves, in the short-term, are more commonly linked to a particular type of active institutional investors – hedge funds. In the case of A2ZINFRA, investors need not worry about such volatility considering active hedge funds don’t have a significant stake. However, we should dig deeper into A2ZINFRA’s ownership structure and find out how other key ownership classes can affect its investment profile.

Insider Ownership

I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. A2ZINFRA insiders hold a significant stake of 33.53% in the company. This level of insider ownership has been found to have a negative impact on companies with consistently low PE ratios (underperformers), while it has been positive in the case of high PE ratio firms (outperformers). It’s also interesting to learn what A2ZINFRA insiders have been doing with their shareholdings lately. Insiders buying company shares can be a positive indicator of future performance, but a selling decision can simply be driven by personal financial needs.

NSEI:A2ZINFRA Insider_trading Mar 30th 18

General Public Ownership

The general public holds a substantial 40.07% stake in A2ZINFRA, making it a highly popular stock among retail investors. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Company Ownership

Potential investors in A2ZINFRA should also look at another important group of investors: private companies, with a stake of 15.01%, who are primarily invested because of strategic and capital gain interests. An ownership of this size indicates a strong financial backing and has the potential to influence A2ZINFRA’s business strategy. Thus, investors should dig deeper into A2ZINFRA’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

A2ZINFRA’s considerably high level of institutional ownership calls for further analysis into its margin of safety. This is to avoid getting trapped in a sustained sell-off that is often observed in stocks with this level of institutional participation. However, if you are building an investment case for A2ZINFRA, ownership structure alone should not dictate your decision to buy or sell the stock. Rather, you should be examining fundamental factors such as A2Z Infra Engineering’s past track record and financial health. I urge you to complete your research by taking a look at the following:

1. Financial Health: Is A2ZINFRA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Past Track Record: Has A2ZINFRA been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of A2ZINFRA’s historicals for more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.