Vardhman Special Steels Limited (NSE:VSSL) surges 12%; public companies who own 49% shares profited along with insiders

Key Insights

• The considerable ownership by public companies in Vardhman Special Steels indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 3 shareholders
• 21% of Vardhman Special Steels is held by insiders

If you want to know who really controls Vardhman Special Steels Limited (NSE:VSSL), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are public companies with 49% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While public companies were the group that benefitted the most from last week’s ₹2.2b market cap gain, insiders too had a 21% share in those profits.

In the chart below, we zoom in on the different ownership groups of Vardhman Special Steels.

See our latest analysis for Vardhman Special Steels

What Does The Institutional Ownership Tell Us About Vardhman Special Steels?

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.

Institutions have a very small stake in Vardhman Special Steels. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

We note that hedge funds don't have a meaningful investment in Vardhman Special Steels. Vardhman Textiles Limited is currently the company's largest shareholder with 25% of shares outstanding. With 14% and 13% of the shares outstanding respectively, Sachit Jain and Vardhman Holdings Limited are the second and third largest shareholders. Sachit Jain, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Vardhman Special Steels

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders maintain a significant holding in Vardhman Special Steels Limited. Insiders have a ₹4.3b stake in this ₹20b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vardhman Special Steels. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 7.9%, of the Vardhman Special Steels 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 49% of Vardhman Special Steels stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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 Vardhman Special Steels is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.