La Opala RG Limited (NSE:LAOPALA) surges 11%; private companies who own 47% shares profited along with institutions

Key Insights

• The considerable ownership by private companies in La Opala RG indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 56% of the company
• Insider ownership in La Opala RG is 21%

Every investor in La Opala RG Limited (NSE:LAOPALA) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 47% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 11% increase in the stock price last week, private companies profited the most, but institutions who own 21% stock also stood to gain from the increase.

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

View our latest analysis for La Opala RG

What Does The Institutional Ownership Tell Us About La Opala RG?

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.

La Opala RG 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 La Opala RG's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in La Opala RG. Genesis Exports Ltd. is currently the company's largest shareholder with 47% of shares outstanding. Sushil Jhunjhunwala is the second largest shareholder owning 9.6% of common stock, and Ajit Jhunjhunwala holds about 8.8% of the company stock. Note that the second and third-largest shareholders are also Top Key Executive and Vice Chairman, respectively, meaning that the company's top shareholders are insiders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 La Opala RG

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 most recent data indicates that insiders own a reasonable proportion of La Opala RG Limited. Insiders own ₹5.3b worth of shares in the ₹26b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in La Opala RG. 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 47%, 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:

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for La Opala RG 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.