Vaibhav Global Limited's (NSE:VAIBHAVGBL) market cap surged ₹4.8b last week, private companies who have a lot riding on the company were rewarded

Key Insights

• Vaibhav Global's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 56% of the company is held by a single shareholder (Brett Enterprises Private Limited)
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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To get a sense of who is truly in control of Vaibhav Global Limited (NSE:VAIBHAVGBL), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies were the biggest beneficiaries of last week’s 14% gain.

In the chart below, we zoom in on the different ownership groups of Vaibhav Global.

View our latest analysis for Vaibhav Global

What Does The Institutional Ownership Tell Us About Vaibhav Global?

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.

We can see that Vaibhav Global does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Vaibhav Global, (below). Of course, keep in mind that there are other factors to consider, too.

Vaibhav Global is not owned by hedge funds. The company's largest shareholder is Brett Enterprises Private Limited, with ownership of 56%. This implies that they have majority interest control of the future of the company. With 7.6% and 5.7% of the shares outstanding respectively, Nalanda Capital Pte Ltd and Malabar Investments, LLC are the second and third largest shareholders. Furthermore, CEO Sunil Agrawal is the owner of 1.4% of the company's shares.

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

Insider Ownership Of Vaibhav Global

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

We can see that insiders own shares in Vaibhav Global Limited. In their own names, insiders own ₹1.8b worth of stock in the ₹39b company. 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 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vaibhav Global. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 13% stake in Vaibhav Global. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that Private Companies hold 56%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Vaibhav Global (of which 1 is a bit concerning!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.