Private companies who have a significant stake must be disappointed along with institutions after Arvind Fashions Limited's (NSE:ARVINDFASN) market cap dropped by ₹5.1b

Key Insights

• Significant control over Arvind Fashions by private companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 6 shareholders
• 31% of Arvind Fashions is held by Institutions

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Every investor in Arvind Fashions Limited (NSE:ARVINDFASN) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 31% shares weren’t spared from last week’s ₹5.1b market cap drop, private companies as a group suffered the maximum losses

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

View our latest analysis for Arvind Fashions

What Does The Institutional Ownership Tell Us About Arvind Fashions?

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 Arvind Fashions 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. 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 Arvind Fashions' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Arvind Fashions. Mayur Prakash Trading and Commercial Private Limited is currently the largest shareholder, with 31% of shares outstanding. The second and third largest shareholders are Axis Asset Management Company Limited and ICICI Prudential Asset Management Company Limited, with an equal amount of shares to their name at 4.8%.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Arvind Fashions

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Arvind Fashions Limited. As individuals, the insiders collectively own ₹5.1b worth of the ₹65b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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 36%, of the Arvind Fashions stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Arvind Fashions better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Arvind Fashions you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.