Public companies who have a significant stake must be disappointed along with institutions after Sanofi India Limited's (NSE:SANOFI) market cap dropped by ₹5.8b

Key Insights

• Significant control over Sanofi India by public companies implies that the general public has more power to influence management and governance-related decisions
• 60% of the company is held by a single shareholder (Sanofi)
• Institutional ownership in Sanofi India is 26%

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To get a sense of who is truly in control of Sanofi India Limited (NSE:SANOFI), it is important to understand the ownership structure of the business. We can see that public companies own the lion's share in the company with 60% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 26% came under pressure after market cap dropped to ₹134b last week,public companies took the most losses.

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

See our latest analysis for Sanofi India

What Does The Institutional Ownership Tell Us About Sanofi India?

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 Sanofi India. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Sanofi India's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Sanofi India. The company's largest shareholder is Sanofi, with ownership of 60%. This implies that they have majority interest control of the future of the company. With 5.9% and 3.9% of the shares outstanding respectively, Life Insurance Corporation of India, Asset Management Arm and Nippon Life India Asset Management Limited are the second and third largest shareholders.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Sanofi India

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

We note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sanofi India. 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.

Public Company Ownership

We can see that public companies hold 60% of the Sanofi India shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Sanofi India you should know about.

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.