While institutions invested in Bharat Heavy Electricals Limited (NSE:BHEL) benefited from last week's 3.5% gain, state or government stood to gain the most

Key Insights

• Significant control over Bharat Heavy Electricals by state or government implies that the general public has more power to influence management and governance-related decisions
• 63% of the company is held by a single shareholder (India)
• Institutions own 20% of Bharat Heavy Electricals

A look at the shareholders of Bharat Heavy Electricals Limited (NSE:BHEL) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are state or government with 63% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

State or government gained the most after market cap touched ₹1.1t last week, while institutions who own 20% also benefitted.

Let's delve deeper into each type of owner of Bharat Heavy Electricals, beginning with the chart below.

View our latest analysis for Bharat Heavy Electricals

What Does The Institutional Ownership Tell Us About Bharat Heavy Electricals?

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.

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

Hedge funds don't have many shares in Bharat Heavy Electricals. India is currently the company's largest shareholder with 63% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 8.2% and 2.2%, of the shares outstanding, respectively.

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

Insider Ownership Of Bharat Heavy Electricals

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of Bharat Heavy Electricals Limited in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own ₹31k of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Bharat Heavy Electricals. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Bharat Heavy Electricals that you should be aware of.

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.

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