With a 50% stake, Pidilite Industries Limited (NSE:PIDILITIND) insiders have a lot riding on the company

Key Insights

• Pidilite Industries' significant insider ownership suggests inherent interests in company's expansion
• The top 7 shareholders own 51% of the company
• Institutional ownership in Pidilite Industries is 20%

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To get a sense of who is truly in control of Pidilite Industries Limited (NSE:PIDILITIND), it is important to understand the ownership structure of the business. With 50% stake, individual insiders 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.

So it follows, every decision made by insiders of Pidilite Industries regarding the company's future would be crucial to them.

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

Check out our latest analysis for Pidilite Industries

What Does The Institutional Ownership Tell Us About Pidilite 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.

As you can see, institutional investors have a fair amount of stake in Pidilite Industries. 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 Pidilite Industries, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Pidilite Industries. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Pidilite Industries' case, its Top Key Executive, Madhukar Parekh, is the largest shareholder, holding 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.9% and 9.2% of the stock. Interestingly, the third-largest shareholder, Ajay Parekh is also a Vice Chairman, again, indicating strong insider ownership amongst the company's top shareholders.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

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

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 ₹1.6t, that means insiders have a whopping ₹794b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 15% 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

It seems that Private Companies own 14%, of the Pidilite 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 Pidilite Industries better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Pidilite Industries you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.