Private companies are Chemfab Alkalis Limited's (NSE:CHEMFAB) biggest owners and were rewarded after market cap rose by ₹908m last week

Key Insights

• The considerable ownership by private companies in Chemfab Alkalis indicates that they collectively have a greater say in management and business strategy
• 58% of the business is held by the top 2 shareholders
• Insiders own 22% of Chemfab Alkalis

A look at the shareholders of Chemfab Alkalis Limited (NSE:CHEMFAB) can tell us which group is most powerful. With 55% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies were the biggest beneficiaries of last week’s 11% gain.

In the chart below, we zoom in on the different ownership groups of Chemfab Alkalis.

View 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 are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Chemfab Alkalis, for yourself, below.

We note that hedge funds don't have a meaningful investment in Chemfab Alkalis. Looking at our data, we can see that the largest shareholder is Dr Rao Holdings Pte Ltd with 48% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 7.8% by the third-largest shareholder. 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 it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Chemfab Alkalis Limited. It has a market capitalization of just ₹9.0b, and insiders have ₹2.0b worth of shares in their own names. 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. 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

We can see that Private Companies own 55%, of the shares on issue. 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. Case in point: We've spotted 2 warning signs for Chemfab Alkalis you should be aware of, and 1 of them is concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.