Neogen Chemicals Limited (NSE:NEOGEN) CEO Haridas Kanani, the company's largest shareholder sees 15% reduction in holdings value

Key Insights

• Neogen Chemicals' significant insider ownership suggests inherent interests in company's expansion
• 51% of the business is held by the top 2 shareholders
• Institutions own 28% of Neogen Chemicals

If you want to know who really controls Neogen Chemicals Limited (NSE:NEOGEN), 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 individual insiders with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 15%.

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

See our latest analysis for Neogen Chemicals

What Does The Institutional Ownership Tell Us About Neogen Chemicals?

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 Neogen Chemicals. 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 Neogen Chemicals, (below). Of course, keep in mind that there are other factors to consider, too.

Neogen Chemicals is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Haridas Kanani with 44% of shares outstanding. For context, the second largest shareholder holds about 7.7% of the shares outstanding, followed by an ownership of 7.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Harin Kanani is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

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.

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 Neogen Chemicals

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

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 most recent data indicates that insiders own the majority of Neogen Chemicals Limited. This means they can collectively make decisions for the company. So they have a ₹27b stake in this ₹51b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Neogen Chemicals. 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:

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. For instance, we've identified 2 warning signs for Neogen Chemicals (1 can't be ignored) that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.