Sadhana Nitro Chem Limited's (NSE:SADHNANIQ) market cap dropped ₹2.1b last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Sadhana Nitro Chem indicates that they collectively have a greater say in management and business strategy
• 50% of the business is held by the top 4 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Sadhana Nitro Chem Limited (NSE:SADHNANIQ), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 46% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private companies as a group endured the highest losses last week after market cap fell by ₹2.1b.

Let's delve deeper into each type of owner of Sadhana Nitro Chem, beginning with the chart below.

See our latest analysis for Sadhana Nitro Chem

What Does The Lack Of Institutional Ownership Tell Us About Sadhana Nitro Chem?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Sadhana Nitro Chem, for yourself, below.

Sadhana Nitro Chem is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Manekchand Panachand Trading Investment Company Private Limited with 46% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 1.6% and 1.2%, of the shares outstanding, respectively. Asit Javeri, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. In addition, we found that Abhishek Javeri, the CEO has 0.6% of the shares allocated to their name.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Sadhana Nitro Chem

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 some shares in Sadhana Nitro Chem Limited. As individuals, the insiders collectively own ₹1.2b worth of the ₹15b company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 46% stake in Sadhana Nitro Chem. 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

Our data indicates that Private Companies hold 46%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Sadhana Nitro Chem is showing 6 warning signs in our investment analysis , and 3 of those make us uncomfortable...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.