Cera Sanitaryware Limited's (NSE:CERA) last week's 5.7% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Cera Sanitaryware indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 53% of the company
• Insiders own 24% of Cera Sanitaryware

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A look at the shareholders of Cera Sanitaryware Limited (NSE:CERA) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 33% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of private companies took a hit after last week’s 5.7% price drop, insiders with their 24% also suffered.

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

See our latest analysis for Cera Sanitaryware

What Does The Institutional Ownership Tell Us About Cera Sanitaryware?

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.

Cera Sanitaryware already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Cera Sanitaryware's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Cera Sanitaryware. Vikram Investments Company Private Limited is currently the largest shareholder, with 22% of shares outstanding. In comparison, the second and third largest shareholders hold about 18% and 9.6% of the stock. Vikram Somany, who is the second-largest shareholder, also happens to hold the title of Co-Chief Executive Officer.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Cera Sanitaryware

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.

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 Cera Sanitaryware Limited. It has a market capitalization of just ₹76b, and insiders have ₹18b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Cera Sanitaryware. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

Private equity firms hold a 9.6% stake in Cera Sanitaryware. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 33%, of the Cera Sanitaryware stock. 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:

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. Take risks for example - Cera Sanitaryware has 1 warning sign we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.