After the recent decline, Hind Rectifiers Limited (NSE:HIRECT) CEO Saurabh Nevatia's holdings have lost 14% of their value

Key Insights

• Significant insider control over Hind Rectifiers implies vested interests in company growth
• The top 2 shareholders own 50% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Hind Rectifiers Limited (NSE:HIRECT), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders as a group endured the highest losses after market cap fell by ₹2.7b.

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

View our latest analysis for Hind Rectifiers

What Does The Institutional Ownership Tell Us About Hind Rectifiers?

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.

Hind Rectifiers already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Hind Rectifiers, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Hind Rectifiers. Looking at our data, we can see that the largest shareholder is the CEO Saurabh Nevatia with 36% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 2.9% by the third-largest shareholder.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hind Rectifiers

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders own more than half of Hind Rectifiers Limited. This gives them effective control of the company. That means they own ₹8.5b worth of shares in the ₹16b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hind Rectifiers. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 14% of the Hind Rectifiers shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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 Hind Rectifiers , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.