Honeywell Automation India Limited's (NSE:HONAUT) top owners are public companies with 75% stake, while 14% is held by institutions

Key Insights

• Honeywell Automation India's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• 75% of the company is held by a single shareholder (Honeywell International Inc.)
• Institutional ownership in Honeywell Automation India is 14%

Every investor in Honeywell Automation India Limited (NSE:HONAUT) should be aware of the most powerful shareholder groups. With 75% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And institutions on the other hand have a 14% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

Let's delve deeper into each type of owner of Honeywell Automation India, beginning with the chart below.

See our latest analysis for Honeywell Automation India

What Does The Institutional Ownership Tell Us About Honeywell Automation India?

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 Honeywell Automation India does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Honeywell Automation India's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Honeywell Automation India. Looking at our data, we can see that the largest shareholder is Honeywell International Inc. with 75% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 2.7% and 2.3% of the shares outstanding respectively, Nippon Life India Asset Management Limited and SBI Funds Management 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. 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 Honeywell Automation India

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 most recent data indicates that insiders own less than 1% of Honeywell Automation India Limited. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own ₹8.1m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 11% 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.

Public Company Ownership

We can see that public companies hold 75% of the Honeywell Automation India shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Honeywell Automation India 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.