Stock Analysis

Vishal Fabrics Limited (NSE:VISHAL) surges 13%; private companies who own 58% shares profited along with insiders

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Every investor in Vishal Fabrics Limited (NSE:VISHAL) should be aware of the most powerful shareholder groups. With 58% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While private companies were the group that reaped the most benefits after last week’s 13% price gain, insiders also received a 24% cut.

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

Check out our latest analysis for Vishal Fabrics

NSEI:VISHAL Ownership Breakdown April 20th 2022

What Does The Institutional Ownership Tell Us About Vishal Fabrics?

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.

We can see that Vishal Fabrics 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. 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 Vishal Fabrics' earnings history below. Of course, the future is what really matters.

NSEI:VISHAL Earnings and Revenue Growth April 20th 2022

Vishal Fabrics is not owned by hedge funds. Chiripal Industries Limited is currently the company's largest shareholder with 29% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.4% and 4.7% of the stock. In addition, we found that Brijmohan Chiripal, the CEO has 4.6% of the shares allocated to their name.

We did some more digging and found that 6 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Vishal Fabrics

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

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 information suggests that insiders maintain a significant holding in Vishal Fabrics Limited. Insiders have a ₹1.9b stake in this ₹8.0b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. 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

We can see that Private Companies own 58%, of the shares on issue. 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:

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. For instance, we've identified 3 warning signs for Vishal Fabrics (1 is potentially serious) that you should be aware of.

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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