Sundram Fasteners Limited (NSE:SUNDRMFAST) surges 7.1%; private companies who own 47% shares profited along with institutions

Key Insights

• Significant control over Sundram Fasteners by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 54% of the company
• Institutional ownership in Sundram Fasteners is 29%

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If you want to know who really controls Sundram Fasteners Limited (NSE:SUNDRMFAST), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that benefitted the most from last week’s ₹14b market cap gain, institutions too had a 29% share in those profits.

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

View our latest analysis for Sundram Fasteners

What Does The Institutional Ownership Tell Us About Sundram Fasteners?

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.

We can see that Sundram Fasteners does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sundram Fasteners, (below). Of course, keep in mind that there are other factors to consider, too.

It looks like hedge funds own 5.1% of Sundram Fasteners shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Tvs Sundram Fasteners Private Limited is the largest shareholder with 47% of shares outstanding. With 7.0% and 6.7% of the shares outstanding respectively, SBI Funds Management Limited and HDFC Asset Management Company Limited are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.

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 Sundram Fasteners

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. 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.

We can report that insiders do own shares in Sundram Fasteners Limited. The insiders have a meaningful stake worth ₹4.6b. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in Sundram Fasteners. 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 47%, of the Sundram Fasteners stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sundram Fasteners better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Sundram Fasteners .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.