Private companies invested in Shriram Pistons & Rings Limited (NSE:SHRIPISTON) up 4.2% last week, insiders too were rewarded

Key Insights

• Shriram Pistons & Rings' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 52% of the business is held by the top 3 shareholders
• Insiders own 31% of Shriram Pistons & Rings

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To get a sense of who is truly in control of Shriram Pistons & Rings Limited (NSE:SHRIPISTON), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 34% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Private companies gained the most after market cap touched ₹119b last week, while insiders who own 31% also benefitted.

Let's take a closer look to see what the different types of shareholders can tell us about Shriram Pistons & Rings.

Check out our latest analysis for Shriram Pistons & Rings

What Does The Institutional Ownership Tell Us About Shriram Pistons & Rings?

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.

Shriram Pistons & Rings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Shriram Pistons & Rings' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Shriram Pistons & Rings. Our data shows that Npr-Riken Corporation is the largest shareholder with 21% of shares outstanding. The second and third largest shareholders are Luv Shriram and Meenakshi Dass, with an equal amount of shares to their name at 16%. Interestingly, the bottom two of the top three shareholders also hold the title of Senior Key Executive and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shriram Pistons & Rings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Shriram Pistons & Rings Limited. It is very interesting to see that insiders have a meaningful ₹37b stake in this ₹119b business. 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 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Shriram Pistons & Rings. 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 34%, of the Shriram Pistons & Rings 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shriram Pistons & Rings better, we need to consider many other factors. For example, we've discovered 1 warning sign for Shriram Pistons & Rings 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.