Hindware Home Innovation Limited's (NSE:HINDWAREAP) 11% loss last week hit both individual investors who own 42% as well as institutions

Key Insights

• The considerable ownership by private companies in Hindware Home Innovation indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 2 shareholders
• Insider ownership in Hindware Home Innovation is 14%

Every investor in Hindware Home Innovation Limited (NSE:HINDWAREAP) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 42% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 23% came under pressure after market cap dropped to ₹21b last week,private companies took the most losses.

In the chart below, we zoom in on the different ownership groups of Hindware Home Innovation.

See our latest analysis for Hindware Home Innovation

What Does The Institutional Ownership Tell Us About Hindware Home Innovation?

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 Hindware Home Innovation 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 Hindware Home Innovation, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Hindware Home Innovation. Looking at our data, we can see that the largest shareholder is Somany Impresa Limited with 42% of shares outstanding. With 8.5% and 7.3% of the shares outstanding respectively, Sandip Somany and Equity Intelligence India Pvt. Ltd. are the second and third largest shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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

Insider Ownership Of Hindware Home Innovation

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 Hindware Home Innovation Limited. Insiders have a ₹2.8b stake in this ₹21b business. 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 20% stake in Hindware Home Innovation. 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 42%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hindware Home Innovation better, we need to consider many other factors. For example, we've discovered 2 warning signs for Hindware Home Innovation (1 is significant!) that you should be aware of before investing here.

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.