Biocon Limited (NSE:BIOCON) insiders have significant skin in the game with 63% ownership

Key Insights

• Biocon's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 60% of the company
• Institutional ownership in Biocon is 25%

If you want to know who really controls Biocon Limited (NSE:BIOCON), then you'll have to look at the makeup of its share registry. With 63% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

So it follows, every decision made by insiders of Biocon regarding the company's future would be crucial to them.

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

View our latest analysis for Biocon

What Does The Institutional Ownership Tell Us About Biocon?

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.

As you can see, institutional investors have a fair amount of stake in Biocon. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Biocon, (below). Of course, keep in mind that there are other factors to consider, too.

Biocon is not owned by hedge funds. Our data suggests that Kiran Mazumdar-Shaw, who is also the company's Top Key Executive, holds the most number of shares at 40%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 20% and 5.0% of the shares outstanding respectively, John Shaw and Life Insurance Corporation of India, Asset Management Arm are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 60% stake.

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 Biocon

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.

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 information suggests that insiders own more than half of Biocon Limited. This gives them effective control of the company. Given it has a market cap of ₹430b, that means insiders have a whopping ₹269b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Biocon. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Biocon better, we need to consider many other factors. Be aware that Biocon is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

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.