Institutions along with private companies who hold considerable shares inArvind Limited (NSE:ARVIND) come under pressure; lose 5.7% of holdings value

Key Insights

• Arvind's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 6 shareholders own 51% of the company
• 29% of Arvind is held by Institutions

Every investor in Arvind Limited (NSE:ARVIND) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 38% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 29% came under pressure after market cap dropped to ₹91b last week,private companies took the most losses.

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

View our latest analysis for Arvind

What Does The Institutional Ownership Tell Us About Arvind?

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.

As you can see, institutional investors have a fair amount of stake in Arvind. 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 Arvind's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Arvind. Mayur Prakash Trading and Commercial Private Limited is currently the company's largest shareholder with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.8% and 4.3%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 6 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Arvind

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. 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.

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 less than 1% of Arvind Limited. However, it's possible that insiders might have an indirect interest through a more complex structure. Keep in mind that it's a big company, and the insiders own ₹309m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in Arvind. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 38%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Arvind better, we need to consider many other factors. Be aware that Arvind is showing 1 warning sign in our investment analysis , you should know about...

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.