Private equity firms who have a significant stake must be disappointed along with institutions after J. B. Chemicals & Pharmaceuticals Limited's (NSE:JBCHEPHARM) market cap dropped by ₹16b

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
• The largest shareholder of the company is KKR & Co. Inc. with a 54% stake
• Insiders have sold recently

Every investor in J. B. Chemicals & Pharmaceuticals Limited (NSE:JBCHEPHARM) should be aware of the most powerful shareholder groups. With 54% stake, private equity firms 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.

Following a 5.2% decrease in the stock price last week, private equity firms suffered the most losses, but institutions who own 24% stock also took a hit.

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

See our latest analysis for J. B. Chemicals & Pharmaceuticals

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

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.

As you can see, institutional investors have a fair amount of stake in J. B. Chemicals & Pharmaceuticals. 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 J. B. Chemicals & Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in J. B. Chemicals & Pharmaceuticals. KKR & Co. Inc. is currently the company's largest shareholder with 54% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Nippon Life India Asset Management Limited is the second largest shareholder owning 3.0% of common stock, and Axis Asset Management Company Limited holds about 2.8% of the company stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of J. B. Chemicals & Pharmaceuticals

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 J. B. Chemicals & Pharmaceuticals Limited in their own names. Keep in mind that it's a big company, and the insiders own ₹196m worth of shares. The absolute value might be more important than the proportional share. 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-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. 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 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 might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company 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. Take risks for example - J. B. Chemicals & Pharmaceuticals has 2 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.