Raghuram Shetty Heranba Industries Limited's (NSE:HERANBA) CEO is the most bullish insider, and their stock value gained 16%last week

Key Insights

• Insiders appear to have a vested interest in Heranba Industries' growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 58% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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To get a sense of who is truly in control of Heranba Industries Limited (NSE:HERANBA), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 74% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 16% gain.

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

Check out our latest analysis for Heranba Industries

What Does The Lack Of Institutional Ownership Tell Us About Heranba Industries?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. 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 Heranba Industries, for yourself, below.

We note that hedge funds don't have a meaningful investment in Heranba Industries. With a 35% stake, CEO Raghuram Shetty is the largest shareholder. Sadashiv Shetty is the second largest shareholder owning 23% of common stock, and Sujata Shetty holds about 8.1% of the company stock. Interestingly, the second-largest shareholder, Sadashiv Shetty is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Heranba Industries

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

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.

Our information suggests that insiders own more than half of Heranba Industries Limited. This gives them effective control of the company. Given it has a market cap of ₹9.8b, that means they have ₹7.3b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Heranba Industries better, we need to consider many other factors. For example, we've discovered 2 warning signs for Heranba Industries (1 is significant!) that you should be aware of before investing here.

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.