Public companies who hold 43% of Lumax Industries Limited (NSE:LUMAXIND) gained 11%, insiders profited as well

Key Insights

• Lumax Industries' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 3 shareholders own 62% of the company
• Insiders own 27% of Lumax Industries

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Every investor in Lumax Industries Limited (NSE:LUMAXIND) should be aware of the most powerful shareholder groups. With 43% stake, public 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).

Following a 11% increase in the stock price last week, public companies profited the most, but insiders who own 27% stock also stood to gain from the increase.

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

View our latest analysis for Lumax Industries

What Does The Institutional Ownership Tell Us About Lumax Industries?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Lumax Industries. 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 Lumax Industries' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Lumax Industries. Stanley Electric Co., Ltd. is currently the largest shareholder, with 36% of shares outstanding. The second and third largest shareholders are Anmol Jain and Deepak Jain, with an equal amount of shares to their name at 13%. Interestingly, the bottom two of the top three shareholders also hold the title of Senior Key Executive and Chairman of the Board, respectively, suggesting that these insiders have a personal stake in the company.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 62% stake.

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 Lumax Industries

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.

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 most recent data indicates that insiders own a reasonable proportion of Lumax Industries Limited. It has a market capitalization of just ₹24b, and insiders have ₹6.4b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in Lumax Industries. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 43% of the Lumax Industries 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. For instance, we've identified 2 warning signs for Lumax Industries (1 makes us a bit uncomfortable) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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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.