Sunflag Iron and Steel Company Limited's (NSE:SUNFLAG) market cap up ₹5.6b last week, benefiting both private companies who own 41% as well as insiders

Key Insights

• The considerable ownership by private companies in Sunflag Iron and Steel indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 54% of the company
• Insiders own 25% of Sunflag Iron and Steel

Every investor in Sunflag Iron and Steel Company Limited (NSE:SUNFLAG) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 15% price gain, insiders also received a 25% cut.

Let's delve deeper into each type of owner of Sunflag Iron and Steel, beginning with the chart below.

Check out our latest analysis for Sunflag Iron and Steel

What Does The Lack Of Institutional Ownership Tell Us About Sunflag Iron and Steel?

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 could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Sunflag Iron and Steel might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Sunflag Iron and Steel. The company's largest shareholder is Sunflag Limited, with ownership of 36%. In comparison, the second and third largest shareholders hold about 10.0% and 7.3% of the stock. Suhrit Ravi Bhardwaj, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Sunflag Iron and Steel

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Sunflag Iron and Steel Company Limited. Insiders have a ₹11b stake in this ₹43b business. 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 21% stake in the company, and hence can't easily be ignored. 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 41%, of the Sunflag Iron and Steel stock. 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.

Public Company Ownership

Public companies currently own 11% of Sunflag Iron and Steel stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Sunflag Iron and Steel , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.