Unichem Laboratories Limited's (NSE:UNICHEMLAB) market cap rose ₹3.6b last week; public companies who hold 53% profited and so did insiders

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
• The largest shareholder of the company is Ipca Laboratories Limited with a 53% stake
• Insiders own 19% of Unichem Laboratories

To get a sense of who is truly in control of Unichem Laboratories Limited (NSE:UNICHEMLAB), it is important to understand the ownership structure of the business. With 53% stake, public companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 10% increase in the stock price last week, public companies profited the most, but insiders who own 19% stock also stood to gain from the increase.

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

View our latest analysis for Unichem Laboratories

What Does The Institutional Ownership Tell Us About Unichem Laboratories?

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 Unichem Laboratories. 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 Unichem Laboratories' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Unichem Laboratories. Our data shows that Ipca Laboratories Limited is the largest shareholder with 53% of shares outstanding. This implies that they have majority interest control of the future of the company. With 16% and 8.0% 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 company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our information suggests that insiders maintain a significant holding in Unichem Laboratories Limited. Insiders have a ₹7.2b stake in this ₹39b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. 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 14% stake in Unichem Laboratories. 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 53% of the Unichem Laboratories shares on issue. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Unichem Laboratories you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.