Institutional investors may overlook Kirloskar Pneumatic Company Limited's (NSE:KIRLPNU) recent ₹4.8b market cap drop as long-term gains remain positive

Key Insights

• Significantly high institutional ownership implies Kirloskar Pneumatic's stock price is sensitive to their trading actions
• A total of 5 investors have a majority stake in the company with 51% ownership
• Insiders have sold recently

Every investor in Kirloskar Pneumatic Company Limited (NSE:KIRLPNU) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 4.4% in value last week. However, the 169% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.

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

View our latest analysis for Kirloskar Pneumatic

What Does The Institutional Ownership Tell Us About Kirloskar Pneumatic?

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.

Kirloskar Pneumatic already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Kirloskar Pneumatic's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Kirloskar Pneumatic. From our data, we infer that the largest shareholder is Rahul Kirloskar (who also holds the title of Top Key Executive) with 15% 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. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 9.9% by the third-largest shareholder.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Kirloskar Pneumatic

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Kirloskar Pneumatic Company Limited. Insiders own ₹32b worth of shares in the ₹106b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kirloskar Pneumatic. 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 9.9% of the Kirloskar Pneumatic 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Kirloskar Pneumatic that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.