Avanti Feeds Limited's (NSE:AVANTIFEED) biggest owners are private companies who got richer after stock soared 7.1% last week

Key Insights

• The considerable ownership by private companies in Avanti Feeds indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 2 shareholders
• Insider ownership in Avanti Feeds is 14%

To get a sense of who is truly in control of Avanti Feeds Limited (NSE:AVANTIFEED), it is important to understand the ownership structure of the business. With 32% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies collectively scored the highest last week as the company hit ₹76b market cap following a 7.1% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Avanti Feeds.

View our latest analysis for Avanti Feeds

What Does The Institutional Ownership Tell Us About Avanti Feeds?

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 Avanti Feeds 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Avanti Feeds' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Avanti Feeds. Srinivasa Cystine Ltd. is currently the company's largest shareholder with 27% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 24% and 12%, of the shares outstanding, respectively. Alluri Kumar, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Avanti Feeds

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

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Avanti Feeds Limited. It has a market capitalization of just ₹76b, and insiders have ₹10b worth of shares in their own names. 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-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. 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

It seems that Private Companies own 32%, of the Avanti Feeds 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.

Public Company Ownership

Public companies currently own 24% of Avanti Feeds stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Avanti Feeds better, we need to consider many other factors. Take risks for example - Avanti Feeds has 1 warning sign we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.