Samvardhana Motherson International Limited (NSE:MOTHERSON) surges 4.4%; private companies who own 36% shares profited along with institutions

Key Insights

• The considerable ownership by private companies in Samvardhana Motherson International indicates that they collectively have a greater say in management and business strategy
• 57% of the business is held by the top 5 shareholders
• Insiders own 14% of Samvardhana Motherson International

A look at the shareholders of Samvardhana Motherson International Limited (NSE:MOTHERSON) can tell us which group is most powerful. With 36% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While private companies were the group that benefitted the most from last week’s ₹36b market cap gain, institutions too had a 24% share in those profits.

Let's delve deeper into each type of owner of Samvardhana Motherson International, beginning with the chart below.

Check out our latest analysis for Samvardhana Motherson International

What Does The Institutional Ownership Tell Us About Samvardhana Motherson International?

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.

Samvardhana Motherson International already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Samvardhana Motherson International's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Samvardhana Motherson International. The company's largest shareholder is Shri Sehgals Trustee Company Private Limited, with ownership of 14%. With 13% and 12% of the shares outstanding respectively, Vivek Sehgal and Renu Sehgal Trust are the second and third largest shareholders.

On looking further, we found that 57% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Samvardhana Motherson International

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 information suggests that insiders maintain a significant holding in Samvardhana Motherson International Limited. It is very interesting to see that insiders have a meaningful ₹119b stake in this ₹842b business. 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.

General Public Ownership

The general public, who are usually individual investors, hold a 14% stake in Samvardhana Motherson International. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 36%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

We can see that public companies hold 11% of the Samvardhana Motherson International shares on issue. 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:

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. Case in point: We've spotted 2 warning signs for Samvardhana Motherson International you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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.