Pennar Industries Limited's (NSE:PENIND) market cap rose ₹1.9b last week; retail investors who hold 47% profited and so did insiders

Key Insights

• The considerable ownership by retail investors in Pennar Industries indicates that they collectively have a greater say in management and business strategy
• A total of 17 investors have a majority stake in the company with 50% ownership
• Insiders have bought recently

To get a sense of who is truly in control of Pennar Industries Limited (NSE:PENIND), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that benefitted the most from last week’s ₹1.9b market cap gain, insiders too had a 30% share in those profits.

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

See our latest analysis for Pennar Industries

What Does The Institutional Ownership Tell Us About Pennar Industries?

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.

Less than 5% of Pennar Industries is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Pennar Industries is not owned by hedge funds. Our data shows that Thapati Trading Pvt. Ltd. is the largest shareholder with 16% of shares outstanding. Joginapally Venkata Rao is the second largest shareholder owning 12% of common stock, and Aditya Rao holds about 6.6% of the company stock. Aditya Rao, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

After doing some more digging, we found that the top 17 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Pennar Industries

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.

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 a reasonable proportion of Pennar Industries Limited. It has a market capitalization of just ₹19b, and insiders have ₹5.6b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 47% 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.

Private Company Ownership

It seems that Private Companies own 19%, of the Pennar Industries stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Pennar Industries better, we need to consider many other factors. For instance, we've identified 1 warning sign for Pennar Industries that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.