Cera Sanitaryware Limited's (NSE:CERA) stock price dropped 7.0% last week; private companies would not be happy

Key Insights

• Significant control over Cera Sanitaryware by private companies implies that the general public has more power to influence management and governance-related decisions
• 53% of the business is held by the top 4 shareholders
• Insider ownership in Cera Sanitaryware is 24%

If you want to know who really controls Cera Sanitaryware Limited (NSE:CERA), then you'll have to look at the makeup of its share registry. With 33% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 24% came under pressure after market cap dropped to ₹67b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Cera Sanitaryware.

Check out our latest analysis for Cera Sanitaryware

What Does The Institutional Ownership Tell Us About Cera Sanitaryware?

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.

We can see that Cera Sanitaryware does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Cera Sanitaryware, (below). Of course, keep in mind that there are other factors to consider, too.

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. Vikram Somany is the second largest shareholder owning 18% of common stock, and Nalanda Capital Pte Ltd holds about 9.6% of the company 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

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.

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 Cera Sanitaryware Limited. Insiders have a ₹16b stake in this ₹67b business. 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, who are usually individual investors, hold a 16% stake in Cera Sanitaryware. 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 Equity Ownership

With a stake of 9.6%, private equity firms could influence the Cera Sanitaryware board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 33%, of the company's shares. 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:

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 1 warning sign for Cera Sanitaryware that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.