Institutions along with private equity firms who hold considerable shares inJ. B. Chemicals & Pharmaceuticals Limited (NSE:JBCHEPHARM) come under pressure; lose 4.3% of holdings value

Key Insights

• Significant control over J. B. Chemicals & Pharmaceuticals by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 54% of the company is held by a single shareholder (KKR & Co. Inc.)
• Recent sales by insiders

A look at the shareholders of J. B. Chemicals & Pharmaceuticals Limited (NSE:JBCHEPHARM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 54% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 23% shares weren’t spared from last week’s ₹11b market cap drop, private equity firms as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of J. B. Chemicals & Pharmaceuticals.

Check out our latest analysis for J. B. Chemicals & Pharmaceuticals

What Does The Institutional Ownership Tell Us About J. B. Chemicals & Pharmaceuticals?

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.

J. B. Chemicals & Pharmaceuticals already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 J. B. Chemicals & Pharmaceuticals' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in J. B. Chemicals & Pharmaceuticals. KKR & Co. Inc. is currently the largest shareholder, with 54% 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 3.2% and 2.8%, of the shares outstanding, respectively.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of J. B. Chemicals & Pharmaceuticals

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.

Our data suggests that insiders own under 1% of J. B. Chemicals & Pharmaceuticals Limited in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₹320m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in J. B. Chemicals & Pharmaceuticals. 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 Equity Ownership

Private equity firms hold a 54% stake in J. B. Chemicals & Pharmaceuticals. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand J. B. Chemicals & Pharmaceuticals better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with J. B. Chemicals & Pharmaceuticals .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.