Following recent decline, Spectrum Electrical Industries Limited's (NSE:SPECTRUM) top shareholder CEO Deepak Chaudhari sees holdings value drop by 13%

Key Insights

• Significant insider control over Spectrum Electrical Industries implies vested interests in company growth
• The largest shareholder of the company is Deepak Chaudhari with a 55% stake
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Spectrum Electrical Industries Limited (NSE:SPECTRUM), then you'll have to look at the makeup of its share registry. With 66% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders as a group endured the highest losses after market cap fell by ₹4.4b.

Let's delve deeper into each type of owner of Spectrum Electrical Industries, beginning with the chart below.

View our latest analysis for Spectrum Electrical Industries

What Does The Lack Of Institutional Ownership Tell Us About Spectrum Electrical Industries?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Spectrum Electrical Industries' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Hedge funds don't have many shares in Spectrum Electrical Industries. Looking at our data, we can see that the largest shareholder is the CEO Deepak Chaudhari with 55% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. Spectrum Fabricators (India) Pvt. Ltd. is the second largest shareholder owning 12% of common stock, and Bharti Chaudhari holds about 4.5% of the company stock. Interestingly, the third-largest shareholder, Bharti Chaudhari is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Spectrum Electrical Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Spectrum Electrical Industries Limited. This gives them effective control of the company. That means they own ₹19b worth of shares in the ₹29b 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 22% stake in Spectrum Electrical Industries. 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 12%, 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Spectrum Electrical Industries better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Spectrum Electrical Industries (of which 1 makes us a bit uncomfortable!) you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com