Painful week for private companies invested in Samvardhana Motherson International Limited (NSE:MOTHERSON) after 6.0% drop, institutions also suffered losses

Key Insights

• Samvardhana Motherson International's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 57% of the business is held by the top 5 shareholders
• Insider ownership in Samvardhana Motherson International is 14%

To get a sense of who is truly in control of Samvardhana Motherson International Limited (NSE:MOTHERSON), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 6.0% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 24% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Samvardhana Motherson International.

View our latest analysis for Samvardhana Motherson International

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

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.

As you can see, institutional investors have a fair amount of stake in Samvardhana Motherson International. 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. Looking at our data, we can see that the largest shareholder is Sehgals Family Trust with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 12% of the stock.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Samvardhana Motherson International

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Samvardhana Motherson International Limited. Insiders own ₹177b worth of shares in the ₹1.3t company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 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

It seems that Private Companies own 36%, of the Samvardhana Motherson International stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

It appears to us that public companies own 9.9% of Samvardhana Motherson International. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Samvardhana Motherson International better, we need to consider many other factors. For example, we've discovered 2 warning signs for Samvardhana Motherson International 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.

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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.