With 38% stake, Carborundum Universal Limited (NSE:CARBORUNIV) seems to have captured institutional investors' interest
- Institutions' substantial holdings in Carborundum Universal implies that they have significant influence over the company's share price
- The top 7 shareholders own 52% of the company
- Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of Carborundum Universal Limited (NSE:CARBORUNIV) can tell us which group is most powerful. With 38% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
In the chart below, we zoom in on the different ownership groups of Carborundum Universal.
View our latest analysis for Carborundum Universal
What Does The Institutional Ownership Tell Us About Carborundum Universal?
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 Carborundum Universal. 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 Carborundum Universal, (below). Of course, keep in mind that there are other factors to consider, too.
Carborundum Universal is not owned by hedge funds. Our data shows that Murugappa Group Ltd. is the largest shareholder with 30% of shares outstanding. With 9.8% and 3.9% of the shares outstanding respectively, SBI Funds Management Limited and Kotak Mahindra Asset Management Company Limited are the second and third largest shareholders.
On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Carborundum Universal
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own some shares in Carborundum Universal Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around ₹14b worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 20% stake in Carborundum Universal. 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
We can see that Private Companies own 35%, of the shares on issue. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand Carborundum Universal better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Carborundum Universal you should know about.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
Carborundum Universal Limited, together with its subsidiaries, manufactures and sells abrasives, ceramics, and electro minerals in India and internationally.
Excellent balance sheet with reasonable growth potential.