Both private companies who control a good portion of Reliance Industries Limited (NSE:RELIANCE) along with institutions must be dismayed after last week's 5.3% decrease

Key Insights

• Reliance Industries' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 53% of the business is held by the top 7 shareholders
• 29% of Reliance Industries is held by Institutions

A look at the shareholders of Reliance Industries Limited (NSE:RELIANCE) can tell us which group is most powerful. With 51% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of private companies took a hit after last week’s 5.3% price drop, institutions with their 29% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Reliance Industries.

See our latest analysis for Reliance Industries

What Does The Institutional Ownership Tell Us About Reliance Industries?

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.

We can see that Reliance Industries does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Reliance Industries, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Reliance Industries. Looking at our data, we can see that the largest shareholder is Srichakra Commercials Llp with 12% of shares outstanding. The second and third largest shareholders are Tattvam Enterprises Llp and Devarshi Commercials LLP, with an equal amount of shares to their name at 8.6%. Furthermore, CEO Mukesh Ambani is the owner of 0.8% of the company's shares.

We did some more digging and found that 7 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 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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Reliance Industries

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 some shares in Reliance Industries Limited. The insiders have a meaningful stake worth ₹155b. Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in Reliance Industries. 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 Company Ownership

It seems that Private Companies own 51%, of the Reliance Industries stock. 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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.