The recent pullback must have dismayed Varun Beverages Limited (NSE:VBL) insiders who own 35% of the company

Key Insights

• Varun Beverages' significant insider ownership suggests inherent interests in company's expansion
• 57% of the business is held by the top 3 shareholders
• Institutional ownership in Varun Beverages is 19%

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To get a sense of who is truly in control of Varun Beverages Limited (NSE:VBL), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 35% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 4.0%.

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

View our latest analysis for Varun Beverages

What Does The Institutional Ownership Tell Us About Varun Beverages?

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.

As you can see, institutional investors have a fair amount of stake in Varun Beverages. 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. 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 Varun Beverages' historic earnings and revenue below, but keep in mind there's always more to the story.

Varun Beverages is not owned by hedge funds. Jaipuria Group is currently the largest shareholder, with 25% of shares outstanding. Ravi Jaipuria is the second largest shareholder owning 17% of common stock, and Varun Ravi Jaipuria holds about 15% of the company stock. Varun Ravi Jaipuria, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Varun Beverages

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.

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 a reasonable proportion of Varun Beverages Limited. Insiders own ₹583b worth of shares in the ₹1.7t company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. 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

Our data indicates that Private Companies hold 25%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

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.