Painful week for public companies invested in Vesuvius India Limited (NSE:VESUVIUS) after 9.2% drop, institutions also suffered losses

Key Insights

• Significant control over Vesuvius India by public companies implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is Vesuvius plc with a 56% stake
• Institutions own 24% of Vesuvius India

A look at the shareholders of Vesuvius India Limited (NSE:VESUVIUS) can tell us which group is most powerful. With 56% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 24% shares weren’t spared from last week’s ₹8.6b market cap drop, public companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Vesuvius India.

View our latest analysis for Vesuvius India

What Does The Institutional Ownership Tell Us About Vesuvius India?

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.

Vesuvius India 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Vesuvius India's historic earnings and revenue below, but keep in mind there's always more to the story.

Vesuvius India is not owned by hedge funds. The company's largest shareholder is Vesuvius plc, with ownership of 56%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 9.2% and 7.2%, of the shares outstanding, respectively.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Vesuvius India

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in Vesuvius India Limited. It has a market capitalization of just ₹85b, and insiders have ₹1.1b worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vesuvius India. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 56% of the Vesuvius India shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Vesuvius India , and understanding them should be part of your investment process.

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.