While institutions invested in Bharat Bijlee Limited (NSE:BBL) benefited from last week's 17% gain, individual investors stood to gain the most

Key Insights

• Bharat Bijlee's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 51% of the business is held by the top 12 shareholders
• Insider ownership in Bharat Bijlee is 22%

Every investor in Bharat Bijlee Limited (NSE:BBL) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 36% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that benefitted the most from last week’s ₹5.4b market cap gain, institutions too had a 27% share in those profits.

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

View our latest analysis for Bharat Bijlee

What Does The Institutional Ownership Tell Us About Bharat Bijlee?

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.

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. 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 Bharat Bijlee, (below). Of course, keep in mind that there are other factors to consider, too.

Bharat Bijlee is not owned by hedge funds. Danmet Chemicals Pvt. Ltd is currently the company's largest shareholder with 8.1% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.0% and 6.0%, of the shares outstanding, respectively. 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 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Bharat Bijlee

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that insiders maintain a significant holding in Bharat Bijlee Limited. Insiders own ₹8.4b worth of shares in the ₹39b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 36% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 14%, of the company's shares. 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:

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. Be aware that Bharat Bijlee is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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.

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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.