Chemfab Alkalis Limited's (NSE:CHEMFAB) largest shareholders are private companies who were rewarded as market cap surged ₹2.1b last week

Key Insights

• Significant control over Chemfab Alkalis by private companies implies that the general public has more power to influence management and governance-related decisions
• 57% of the business is held by the top 2 shareholders
• Insiders have been selling lately

If you want to know who really controls Chemfab Alkalis Limited (NSE:CHEMFAB), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies were the biggest beneficiaries of last week’s 15% gain.

Let's delve deeper into each type of owner of Chemfab Alkalis, beginning with the chart below.

See our latest analysis for Chemfab Alkalis

What Does The Lack Of Institutional Ownership Tell Us About Chemfab Alkalis?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Chemfab Alkalis might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Chemfab Alkalis. Dr Rao Holdings Pte Ltd is currently the company's largest shareholder with 47% of shares outstanding. In comparison, the second and third largest shareholders hold about 10.0% and 7.8% of the stock. Suresh Rao, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Additionally, the company's CEO Vaithamanithi Srinivasan directly holds 1.3% of the total shares outstanding.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Chemfab Alkalis

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders maintain a significant holding in Chemfab Alkalis Limited. Insiders own ₹3.5b worth of shares in the ₹16b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Chemfab Alkalis. 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

Our data indicates that Private Companies hold 55%, 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:

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. Case in point: We've spotted 1 warning sign for Chemfab Alkalis you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.