Private companies who have a significant stake must be disappointed along with institutions after Saregama India Limited's (NSE:SAREGAMA) market cap dropped by ₹6.4b

Key Insights

• The considerable ownership by private companies in Saregama India indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Composure Services Private Limited with a 55% stake
• Institutions own 21% of Saregama India

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To get a sense of who is truly in control of Saregama India Limited (NSE:SAREGAMA), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 56% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of private companies took a hit after last week’s 7.3% price drop, institutions with their 21% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Saregama India.

See our latest analysis for Saregama India

What Does The Institutional Ownership Tell Us About Saregama India?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Saregama India does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Saregama India's earnings history below. Of course, the future is what really matters.

Saregama India is not owned by hedge funds. Composure Services Private Limited is currently the largest shareholder, with 55% of shares outstanding. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 4.9% and 3.8%, of the shares outstanding, respectively. Furthermore, CEO Vikram Mehra is the owner of 0.8% of the company's shares.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Saregama India

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data suggests that insiders own under 1% of Saregama India Limited in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about ₹668m worth of stock. This compares to a market capitalization of ₹82b. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Saregama India. 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

Our data indicates that Private Companies hold 56%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Saregama India better, we need to consider many other factors. For instance, we've identified 2 warning signs for Saregama India (1 is significant) that you should be aware of.

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.