Institutional investors may adopt severe steps after PI Industries Limited's (NSE:PIIND) latest 4.4% drop adds to a year losses

Key Insights

• Significantly high institutional ownership implies PI Industries' stock price is sensitive to their trading actions
• A total of 7 investors have a majority stake in the company with 53% ownership
• Insiders own 30% of PI Industries

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Every investor in PI Industries Limited (NSE:PIIND) should be aware of the most powerful shareholder groups. With 37% stake, institutions 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.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to ₹560b last week after a 4.4% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 17% for shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell PI Industries, which might have negative implications on individual investors.

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

See our latest analysis for PI Industries

What Does The Institutional Ownership Tell Us About PI Industries?

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.

We can see that PI Industries does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 PI Industries, (below). Of course, keep in mind that there are other factors to consider, too.

PI Industries is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Mayank Singhal with 20% of shares outstanding. With 9.4% and 6.4% of the shares outstanding respectively, Salil Singhal and Life Insurance Corporation of India, Asset Management Arm are the second and third largest shareholders.

We did some more digging and found that 7 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. 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 PI 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. 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 insiders own a significant proportion of PI Industries Limited. It is very interesting to see that insiders have a meaningful ₹170b stake in this ₹560b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PI Industries. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 16%, of the PI 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 PI Industries better, we need to consider many other factors. Take risks for example - PI Industries has 1 warning sign we think 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.

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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.