A great week that adds to Praj Industries Limited's (NSE:PRAJIND) one-year returns, institutional investors who own 34% must be happy

Key Insights

• Given the large stake in the stock by institutions, Praj Industries' stock price might be vulnerable to their trading decisions
• The top 8 shareholders own 50% of the company
• Insider ownership in Praj Industries is 33%

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If you want to know who really controls Praj Industries Limited (NSE:PRAJIND), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 34% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 7.9% last week. One-year return to shareholders is currently 9.7% and last week’s gain was the icing on the cake.

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

See our latest analysis for Praj Industries

What Does The Institutional Ownership Tell Us About Praj Industries?

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.

Praj Industries 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 Praj Industries' earnings history below. Of course, the future is what really matters.

Praj Industries is not owned by hedge funds. Our data shows that Pramod Chaudhari is the largest shareholder with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 5.0%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 8 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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Praj Industries

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 most recent data indicates that insiders own a reasonable proportion of Praj Industries Limited. Insiders own ₹34b worth of shares in the ₹104b 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

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For instance, we've identified 1 warning sign for Praj Industries that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.