While institutions invested in Elgi Equipments Limited (NSE:ELGIEQUIP) benefited from last week's 7.6% gain, individual investors stood to gain the most

Key Insights

• Elgi Equipments' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 8 investors have a majority stake in the company with 52% ownership
• 13% of Elgi Equipments is held by insiders

A look at the shareholders of Elgi Equipments Limited (NSE:ELGIEQUIP) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 34% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 7.6% increase in the stock price last week, individual investors profited the most, but institutions who own 23% stock also stood to gain from the increase.

Let's delve deeper into each type of owner of Elgi Equipments, beginning with the chart below.

View our latest analysis for Elgi Equipments

What Does The Institutional Ownership Tell Us About Elgi Equipments?

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.

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

Our data indicates that hedge funds own 9.2% of Elgi Equipments. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Dark Horse Portfolio Investments Ltd. is currently the company's largest shareholder with 17% of shares outstanding. With 9.2% and 8.9% of the shares outstanding respectively, Pari Washington Company Pvt. Ltd and Jairam Varadaraj are the second and third largest shareholders. Jairam Varadaraj, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Elgi Equipments

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Elgi Equipments Limited. It has a market capitalization of just ₹215b, and insiders have ₹27b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Elgi Equipments. 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

Our data indicates that Private Companies hold 17%, 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.

Public Company Ownership

It appears to us that public companies own 3.5% of Elgi Equipments. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Elgi Equipments , and understanding them should be part of your investment process.

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.