CEO Tarang Jain, Varroc Engineering Limited's (NSE:VARROC) largest shareholder sees value of holdings go down 6.8% after recent drop

Key Insights

• Varroc Engineering's significant insider ownership suggests inherent interests in company's expansion
• Tarang Jain owns 62% of the company
• Institutional ownership in Varroc Engineering is 14%

If you want to know who really controls Varroc Engineering Limited (NSE:VARROC), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders as a group endured the highest losses after market cap fell by ₹5.6b.

In the chart below, we zoom in on the different ownership groups of Varroc Engineering.

See our latest analysis for Varroc Engineering

What Does The Institutional Ownership Tell Us About Varroc Engineering?

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.

As you can see, institutional investors have a fair amount of stake in Varroc Engineering. 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. 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 Varroc Engineering's historic earnings and revenue below, but keep in mind there's always more to the story.

Varroc Engineering is not owned by hedge funds. The company's CEO Tarang Jain is the largest shareholder with 62% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. The second and third largest shareholders are Naresh Chandra Jain and Suman Jain Holdings Trust, with an equal amount of shares to their name at 6.5%.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Varroc Engineering

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.

It seems that insiders own more than half the Varroc Engineering Limited stock. This gives them a lot of power. That means they own ₹52b worth of shares in the ₹76b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Varroc Engineering. 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

We can see that Private Companies own 6.5%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

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

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.