Private companies are DCM Shriram Industries Limited's (NSE:DCMSRIND) biggest owners and were hit after market cap dropped ₹1.6b

Key Insights

• Significant control over DCM Shriram Industries by private companies implies that the general public has more power to influence management and governance-related decisions
• 50% of the company is held by a single shareholder (Lily Commercial Private Limited)
• Institutional ownership in DCM Shriram Industries is 13%

A look at the shareholders of DCM Shriram Industries Limited (NSE:DCMSRIND) can tell us which group is most powerful. With 50% 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).

And following last week's 10% decline in share price, private companies suffered the most losses.

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

See our latest analysis for DCM Shriram Industries

What Does The Institutional Ownership Tell Us About DCM Shriram Industries?

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.

DCM Shriram Industries already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 DCM Shriram Industries, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in DCM Shriram Industries. Looking at our data, we can see that the largest shareholder is Lily Commercial Private Limited with 50% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 4.6% and 4.5% of the shares outstanding respectively, Life Insurance Corporation of India, Asset Management Arm and HB Portfolio Limited, Asset Management Arm are the second and third largest shareholders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of DCM Shriram Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own some shares in DCM Shriram Industries Limited. It has a market capitalization of just ₹14b, and insiders have ₹156m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 32% 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 50%, 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 DCM Shriram Industries 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.