Insiders still control 52% of Hind Rectifiers Limited (NSE:HIRECT) despite recent sales

Key Insights

• Insiders appear to have a vested interest in Hind Rectifiers' growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 50% ownership
• Insiders have sold recently

A look at the shareholders of Hind Rectifiers Limited (NSE:HIRECT) can tell us which group is most powerful. The group holding the most number of shares in the company, around 52% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Insiders own the top position in the company’s share registry despite recent sales and as a result, were the biggest beneficiaries of last week’s 20% gain.

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

See 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.

As you can see, institutional investors have a fair amount of stake in Hind Rectifiers. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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.

Hedge funds don't have many shares in Hind Rectifiers. From our data, we infer that the largest shareholder is Saurabh Nevatia (who also holds the title of Unit CEO) with 36% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. In comparison, the second and third largest shareholders hold about 14% and 3.0% of the stock.

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.

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 Hind Rectifiers

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.

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 ₹9.6b worth of shares in the ₹18b company. That's quite meaningful. 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 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hind Rectifiers. 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.

Public Company Ownership

We can see that public companies hold 14% of the Hind Rectifiers shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Hind Rectifiers better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Hind Rectifiers you should be aware of, and 1 of them is concerning.

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.