With 52% ownership in Pidilite Industries Limited (NSE:PIDILITIND), insiders continue to have the largest holding even though they have sold shares recently

Key Insights

• Significant insider control over Pidilite Industries implies vested interests in company growth
• 54% of the business is held by the top 7 shareholders
• Recent sales by insiders

If you want to know who really controls Pidilite Industries Limited (NSE:PIDILITIND), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 52% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Even though insiders have sold shares recently, the group owns the most numbers of shares in the company.

In the chart below, we zoom in on the different ownership groups of Pidilite Industries.

View our latest analysis for Pidilite Industries

What Does The Institutional Ownership Tell Us About Pidilite Industries?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Pidilite Industries already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Pidilite Industries' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Pidilite Industries. From our data, we infer that the largest shareholder is Madhukar Parekh (who also holds the title of Top Key Executive) with 11% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Narendrakumar Parekh is the second largest shareholder owning 11% of common stock, and Ajay Parekh holds about 9.3% of the company stock. Interestingly, the third-largest shareholder, Ajay Parekh is also a Vice Chairman, again, indicating strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Pidilite Industries

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.

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.

It seems that insiders own more than half the Pidilite Industries Limited stock. This gives them a lot of power. Given it has a market cap of ₹1.7t, that means insiders have a whopping ₹860b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Pidilite Industries. 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 13%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Pidilite Industries better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Pidilite Industries .

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.

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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.