Aarti Industries Limited's (NSE:AARTIIND) last week's 4.4% decline must have disappointed retail investors who have a significant stake

Key Insights

• Significant control over Aarti Industries by retail investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 23 shareholders
• 28% of Aarti Industries is held by insiders

Every investor in Aarti Industries Limited (NSE:AARTIIND) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 4.4% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 28% stock also took a hit.

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

See our latest analysis for Aarti Industries

What Does The Institutional Ownership Tell Us About Aarti Industries?

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.

As you can see, institutional investors have a fair amount of stake in Aarti Industries. 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 Aarti Industries, (below). Of course, keep in mind that there are other factors to consider, too.

Aarti Industries is not owned by hedge funds. The company's largest shareholder is Life Insurance Corporation of India, Asset Management Arm, with ownership of 6.8%. Meanwhile, the second and third largest shareholders, hold 4.1% and 3.1%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 23 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Aarti Industries

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 a reasonable proportion of Aarti Industries Limited. Insiders own ₹40b worth of shares in the ₹144b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

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

Our data indicates that Private Companies hold 16%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Aarti Industries .

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.