Insiders have been selling Centum Electronics Limited (NSE:CENTUM) recently yet still hold a significant stake; 15% drop last week not ideal

Key Insights

• Centum Electronics' significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 51% of the company
• Recent sales by insiders

A look at the shareholders of Centum Electronics Limited (NSE:CENTUM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 64% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And our data suggests that insiders own the top position in the company’s share registry despite recent sales. As market cap fell to ₹20b last week, they would have faced the highest losses than any other shareholder groups of the company.

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

View our latest analysis for Centum Electronics

What Does The Institutional Ownership Tell Us About Centum Electronics?

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 Centum Electronics 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 Centum Electronics' earnings history below. Of course, the future is what really matters.

Centum Electronics is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Apparao Mallavarapu with 46% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.1% and 5.0% of the stock. Note that two of the top three shareholders are also Senior Key Executive and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Centum Electronics

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 Centum Electronics Limited. This gives them effective control of the company. That means they own ₹13b worth of shares in the ₹20b company. That's quite meaningful. 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 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Centum Electronics. 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. For instance, we've identified 4 warning signs for Centum Electronics (2 make us uncomfortable) that 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.