While institutions invested in Aurobindo Pharma Limited (NSE:AUROPHARMA) benefited from last week's 4.1% gain, private companies stood to gain the most

Key Insights

• Significant control over Aurobindo Pharma by private companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 5 shareholders
• Insiders have been selling lately

If you want to know who really controls Aurobindo Pharma Limited (NSE:AUROPHARMA), then you'll have to look at the makeup of its share registry. With 37% stake, private companies 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.

While private companies were the group that reaped the most benefits after last week’s 4.1% price gain, institutions also received a 33% cut.

In the chart below, we zoom in on the different ownership groups of Aurobindo Pharma.

See our latest analysis for Aurobindo Pharma

What Does The Institutional Ownership Tell Us About Aurobindo Pharma?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Aurobindo Pharma. 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 Aurobindo Pharma's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Aurobindo Pharma. The company's largest shareholder is Penaka Family Trust, with ownership of 34%. With 5.6% and 3.8% of the shares outstanding respectively, Kambam Reddy and HDFC Asset Management Company Limited are the second and third largest shareholders. Kambam Reddy, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Aurobindo Pharma

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.

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 Aurobindo Pharma Limited. It is very interesting to see that insiders have a meaningful ₹101b stake in this ₹663b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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

It seems that Private Companies own 37%, of the Aurobindo Pharma stock. 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. For instance, we've identified 2 warning signs for Aurobindo Pharma 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.