Lakshmi Machine Works Limited's (NSE:LAXMIMACH) last week's 3.6% decline must have disappointed private companies who have a significant stake

Key Insights

• Significant control over Lakshmi Machine Works by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 9 shareholders own 50% of the company
• Insiders have been selling lately

Every investor in Lakshmi Machine Works Limited (NSE:LAXMIMACH) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 31% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to ₹150b last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Lakshmi Machine Works, beginning with the chart below.

See our latest analysis for Lakshmi Machine Works

What Does The Institutional Ownership Tell Us About Lakshmi Machine Works?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Lakshmi Machine Works 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 Lakshmi Machine Works' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Lakshmi Machine Works. Our data shows that Lakshmi Cargo Company Limited is the largest shareholder with 10% of shares outstanding. With 9.3% and 6.5% of the shares outstanding respectively, Nemish Shah and Lakshmi Technology & Engineering Industries Ltd. are the second and third largest shareholders. Furthermore, CEO Sanjay Jayavarthanavelu is the owner of 1.3% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Lakshmi Machine Works

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.

It seems insiders own a significant proportion of Lakshmi Machine Works Limited. Insiders own ₹21b worth of shares in the ₹150b 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

The general public, who are usually individual investors, hold a 26% stake in Lakshmi Machine Works. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 31%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

It appears to us that public companies own 13% of Lakshmi Machine Works. 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:

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. Take risks for example - Lakshmi Machine Works has 1 warning sign we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.