Both private companies who control a good portion of Sun Pharmaceutical Industries Limited (NSE:SUNPHARMA) along with institutions must be dismayed after last week's 3.4% decrease

Key Insights

• Significant control over Sun Pharmaceutical Industries by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 3 shareholders own 53% of the company
• Insiders own 12% of Sun Pharmaceutical Industries

A look at the shareholders of Sun Pharmaceutical Industries Limited (NSE:SUNPHARMA) can tell us which group is most powerful. We can see that private companies own the lion's share in the company with 42% 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 ₹3.6t last week,private companies took the most losses.

Let's delve deeper into each type of owner of Sun Pharmaceutical Industries, beginning with the chart below.

See our latest analysis for Sun Pharmaceutical Industries

What Does The Institutional Ownership Tell Us About Sun Pharmaceutical Industries?

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.

Sun Pharmaceutical Industries 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. 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 Pharmaceutical Industries, (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 Sun Pharmaceutical Industries. The company's largest shareholder is Shanghvi Finance Pvt Ltd, with ownership of 40%. With 9.6% and 3.4% of the shares outstanding respectively, Dilip Shanghvi and ICICI Prudential Asset Management Company Limited are the second and third largest shareholders. Dilip Shanghvi, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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

Insider Ownership Of Sun Pharmaceutical Industries

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 most recent data indicates that insiders own a reasonable proportion of Sun Pharmaceutical Industries Limited. It is very interesting to see that insiders have a meaningful ₹431b stake in this ₹3.6t business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 18% stake in Sun Pharmaceutical Industries. 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 Company Ownership

Our data indicates that Private Companies hold 42%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sun Pharmaceutical Industries better, we need to consider many other factors. For instance, we've identified 1 warning sign for Sun Pharmaceutical Industries that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.