Bharat Bijlee Limited's (NSE:BBL) stock price dropped 15% last week; individual investors would not be happy

Key Insights

• The considerable ownership by individual investors in Bharat Bijlee indicates that they collectively have a greater say in management and business strategy
• The top 13 shareholders own 51% of the company
• 22% of Bharat Bijlee is held by insiders

If you want to know who really controls Bharat Bijlee Limited (NSE:BBL), 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 individual investors with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 15% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 22% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Bharat Bijlee.

See our latest analysis for Bharat Bijlee

What Does The Institutional Ownership Tell Us About Bharat Bijlee?

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.

Bharat Bijlee 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 Bharat Bijlee's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Bharat Bijlee. Danmet Chemicals Pvt. Ltd is currently the company's largest shareholder with 8.1% of shares outstanding. With 8.0% and 6.0% of the shares outstanding respectively, Gayatri Education Medical & Research Foundation, Endowment Arm and Nikhil Danani are the second and third largest shareholders. Nikhil Danani, who is the third-largest shareholder, also happens to hold the title of Vice Chairman. Furthermore, CEO Nakul Mehta is the owner of 5.7% of the company's shares.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Bharat Bijlee

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 information suggests that insiders maintain a significant holding in Bharat Bijlee Limited. Insiders own ₹11b worth of shares in the ₹50b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Bharat Bijlee. 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

We can see that Private Companies own 14%, of the shares on issue. 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 Bharat Bijlee better, we need to consider many other factors. Be aware that Bharat Bijlee is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com