Private companies invested in HBL Power Systems Limited (NSE:HBLPOWER) copped the brunt of last week's ₹6.1b market cap decline

Key Insights

• The considerable ownership by private companies in HBL Power Systems indicates that they collectively have a greater say in management and business strategy
• Aluru Family Private Trust owns 51% of the company
• Insider ownership in HBL Power Systems is 10%

To get a sense of who is truly in control of HBL Power Systems Limited (NSE:HBLPOWER), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 51% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies as a group endured the highest losses last week after market cap fell by ₹6.1b.

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

View our latest analysis for HBL Power Systems

What Does The Institutional Ownership Tell Us About HBL Power Systems?

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.

Since institutions own only a small portion of HBL Power Systems, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in HBL Power Systems. Our data shows that Aluru Family Private Trust is the largest shareholder with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. With 3.5% and 1.4% of the shares outstanding respectively, Kavita Aluru and Advay Mikkilineni are the second and third largest shareholders. Advay Mikkilineni, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Aluru Prasad is the owner of 1.3% of the company's shares.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 HBL Power Systems

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.

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.

It seems insiders own a significant proportion of HBL Power Systems Limited. It is very interesting to see that insiders have a meaningful ₹14b stake in this ₹140b business. 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

The general public, who are usually individual investors, hold a 36% stake in HBL Power Systems. 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

It seems that Private Companies own 51%, of the HBL Power Systems stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.