Sun Pharmaceutical Industries Limited (NSE:SUNPHARMA) surges 4.8%; private companies who own 44% shares profited along with institutions

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
• Recent sales by insiders

A look at the shareholders of Sun Pharmaceutical Industries Limited (NSE:SUNPHARMA) can tell us which group is most powerful. The group holding the most number of shares in the company, around 44% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While private companies were the group that benefitted the most from last week’s ₹106b market cap gain, institutions too had a 25% share in those profits.

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

See our latest analysis for Sun Pharmaceutical Industries

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

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.

Sun Pharmaceutical Industries already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sun Pharmaceutical Industries' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Sun Pharmaceutical Industries. Shanghvi Finance Pvt Ltd is currently the company's largest shareholder with 40% of shares outstanding. Dilip Shanghvi is the second largest shareholder owning 9.6% of common stock, and Life Insurance Corporation of India, Asset Management Arm holds about 3.3% of the company stock. Dilip Shanghvi, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. 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 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Sun Pharmaceutical Industries Limited. It is very interesting to see that insiders have a meaningful ₹282b stake in this ₹2.3t 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 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 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

It seems that Private Companies own 44%, of the Sun Pharmaceutical Industries stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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.

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.

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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.