Could The Jyothy Laboratories Limited (NSE:JYOTHYLAB) Ownership Structure Tell Us Something Useful?

If you want to know who really controls Jyothy Laboratories Limited (NSE:JYOTHYLAB), then you’ll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

Jyothy Laboratories isn’t enormous, but it’s not particularly small either. It has a market capitalization of ₹71b, which means it would generally expect to see some institutions on the share registry. In the chart below below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about JYOTHYLAB.

View our latest analysis for Jyothy Laboratories

NSEI:JYOTHYLAB Ownership Summary, April 8th 2019
NSEI:JYOTHYLAB Ownership Summary, April 8th 2019

What Does The Institutional Ownership Tell Us About Jyothy Laboratories?

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 Jyothy Laboratories does have institutional investors; and they hold 22% of the 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. 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 Jyothy Laboratories’s earnings history, below. Of course, the future is what really matters.

NSEI:JYOTHYLAB Income Statement, April 8th 2019
NSEI:JYOTHYLAB Income Statement, April 8th 2019

Jyothy Laboratories is not owned by hedge funds. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Jyothy Laboratories

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the Jyothy Laboratories Limited stock. This gives them a lot of power. Insiders own ₹42b worth of shares in the ₹71b company. That’s extraordinary! It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public holds a 11% stake in JYOTHYLAB. 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 8.2%, of the company’s shares. 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 like to dive deeper into how a company has performed in the past. You can find 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.