Do Institutions Own Sun Pharma Advanced Research Company Limited (NSE:SPARC) Shares?

Every investor in Sun Pharma Advanced Research Company Limited (NSE:SPARC) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Sun Pharma Advanced Research is not a large company by global standards. It has a market capitalization of ₹49b, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Sun Pharma Advanced Research.

View our latest analysis for Sun Pharma Advanced Research

What Does The Institutional Ownership Tell Us About Sun Pharma Advanced Research?

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.

We can see that Sun Pharma Advanced Research does have institutional investors; and they hold a good portion of the company's stock. 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 Sun Pharma Advanced Research, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Sun Pharma Advanced Research. The company's largest shareholder is Shanghvi Finance Pvt Ltd, with ownership of 52%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Dilip Shanghvi is the second largest shareholder owning 11% of common stock, and Sun Pharmaceutical Industries Ltd., Employee Benefit Trust holds about 3.9% of the company stock. Dilip Shanghvi, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Sun Pharma Advanced Research

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.

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 Sun Pharma Advanced Research Company Limited. Insiders have a ₹7.9b stake in this ₹49b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, with a 18% stake in the company, will not 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 Company Ownership

Our data indicates that Private Companies hold 57%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sun Pharma Advanced Research better, we need to consider many other factors. Take risks for example - Sun Pharma Advanced Research has 2 warning signs we think you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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. 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.
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