Public companies invested in Unichem Laboratories Limited (NSE:UNICHEMLAB) copped the brunt of last week's ₹6.4b market cap decline

Key Insights

• Significant control over Unichem Laboratories by public companies implies that the general public has more power to influence management and governance-related decisions
• 53% of the company is held by a single shareholder (Ipca Laboratories Limited)
• 18% of Unichem Laboratories is held by insiders

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A look at the shareholders of Unichem Laboratories Limited (NSE:UNICHEMLAB) can tell us which group is most powerful. With 53% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 13% decrease in the stock price last week, public companies suffered the most losses, but insiders who own 18% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Unichem Laboratories.

See our latest analysis for Unichem Laboratories

What Does The Institutional Ownership Tell Us About Unichem Laboratories?

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 Unichem Laboratories does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Unichem Laboratories' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Unichem Laboratories. Looking at our data, we can see that the largest shareholder is Ipca Laboratories Limited with 53% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 16% and 7.9% of the shares outstanding respectively, Prakash Mody and HDFC Asset Management Company Limited are the second and third largest shareholders.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Unichem Laboratories

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Unichem Laboratories Limited. It has a market capitalization of just ₹42b, and insiders have ₹7.4b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't 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.

Public Company Ownership

It appears to us that public companies own 53% of Unichem Laboratories. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Take risks for example - Unichem Laboratories has 1 warning sign we think you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.