With 75% ownership, Zydus Lifesciences Limited (NSE:ZYDUSLIFE) insiders have a lot at stake

Key Insights

• Zydus Lifesciences' significant insider ownership suggests inherent interests in company's expansion
• 75% of the company is held by a single shareholder (Pankaj Patel)
• Institutions own 14% of Zydus Lifesciences

Every investor in Zydus Lifesciences Limited (NSE:ZYDUSLIFE) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 75% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

So it follows, every decision made by insiders of Zydus Lifesciences regarding the company's future would be crucial to them.

In the chart below, we zoom in on the different ownership groups of Zydus Lifesciences.

View our latest analysis for Zydus Lifesciences

What Does The Institutional Ownership Tell Us About Zydus Lifesciences?

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.

We can see that Zydus Lifesciences does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Zydus Lifesciences' historic earnings and revenue below, but keep in mind there's always more to the story.

Zydus Lifesciences is not owned by hedge funds. Pankaj Patel is currently the company's largest shareholder with 75% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 3.1% and 1.5%, of the shares outstanding, respectively.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Zydus Lifesciences

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.

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.

Our information suggests that insiders own more than half of Zydus Lifesciences Limited. This gives them effective control of the company. Given it has a market cap of ₹995b, that means insiders have a whopping ₹747b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Zydus Lifesciences. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Case in point: We've spotted 1 warning sign for Zydus Lifesciences 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.