Both public companies who control a good portion of Honda India Power Products Limited (NSE:HONDAPOWER) along with institutions must be dismayed after last week's 11% decrease

Key Insights

• Honda India Power Products' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 67% of the company is held by a single shareholder (Honda Motor Co., Ltd.)
• Institutional ownership in Honda India Power Products is 18%

A look at the shareholders of Honda India Power Products Limited (NSE:HONDAPOWER) can tell us which group is most powerful. We can see that public companies own the lion's share in the company with 67% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of public companies took a hit after last week’s 11% price drop, institutions with their 18% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Honda India Power Products.

View our latest analysis for Honda India Power Products

What Does The Institutional Ownership Tell Us About Honda India Power Products?

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.

Honda India Power Products 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Honda India Power Products' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Honda India Power Products. Honda Motor Co., Ltd. is currently the largest shareholder, with 67% of shares outstanding. This implies that they have majority interest control of the future of the company. Nippon Life India Asset Management Limited is the second largest shareholder owning 8.8% of common stock, and Tata Asset Management Limited holds about 5.1% of the company stock.

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 Honda India Power Products

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Honda India Power Products. 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

Public companies currently own 67% of Honda India Power Products stock. 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 Honda India Power Products , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. So take a peek at this free 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.