Samvardhana Motherson International Limited (NSE:MOTHERSON) surges 5.9%; private companies who own 35% 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
• The top 5 shareholders own 54% of the company
• Insider ownership in Samvardhana Motherson International is 14%

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If you want to know who really controls Samvardhana Motherson International Limited (NSE:MOTHERSON), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 5.9% price gain, institutions also received a 26% cut.

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

View 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.

Samvardhana Motherson International is not owned by hedge funds. Our data shows that Shri Sehgals Trustee Company Private Limited is the largest shareholder with 13% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 12% of the stock.

On looking further, we found that 54% 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 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

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 Samvardhana Motherson International Limited. Insiders own ₹166b worth of shares in the ₹1.2t 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 group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 35%, 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

Public companies currently own 9.4% of Samvardhana Motherson International stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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 example, we've discovered 1 warning sign for Samvardhana Motherson International that you should be aware of before investing here.

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.

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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.