Neuland Laboratories Limited's (NSE:NEULANDLAB) market cap dropped ₹6.7b last week; Retail investors bore the brunt

Key Insights

• The considerable ownership by retail investors in Neuland Laboratories indicates that they collectively have a greater say in management and business strategy
• A total of 8 investors have a majority stake in the company with 51% ownership
• Insider ownership in Neuland Laboratories is 37%

A look at the shareholders of Neuland Laboratories Limited (NSE:NEULANDLAB) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of retail investors took a hit after last week’s 6.8% price drop, insiders with their 37% also suffered.

Let's take a closer look to see what the different types of shareholders can tell us about Neuland Laboratories.

Check out our latest analysis for Neuland Laboratories

What Does The Institutional Ownership Tell Us About Neuland Laboratories?

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.

We can see that Neuland Laboratories does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Neuland Laboratories, (below). Of course, keep in mind that there are other factors to consider, too.

Neuland Laboratories is not owned by hedge funds. From our data, we infer that the largest shareholder is Davuluri Rama Rao (who also holds the title of Top Key Executive) with 26% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. In comparison, the second and third largest shareholders hold about 10.0% and 3.3% of the stock. Interestingly, the third-largest shareholder, Davuluri Rao is also a Vice Chairman, again, indicating strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Neuland Laboratories

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Neuland Laboratories Limited. It is very interesting to see that insiders have a meaningful ₹34b stake in this ₹92b 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

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Neuland Laboratories. 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

With a stake of 10.0%, private equity firms could influence the Neuland Laboratories board. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

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.

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.