Sterlite Technologies Limited's (NSE:STLTECH) last week's 7.1% decline must have disappointed private companies who have a significant stake

Key Insights

• The considerable ownership by private companies in Sterlite Technologies indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 4 shareholders
• Insiders have been selling lately

Every investor in Sterlite Technologies Limited (NSE:STLTECH) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private companies endured the biggest losses as the stock fell by 7.1%.

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

Check out our latest analysis for Sterlite Technologies

What Does The Institutional Ownership Tell Us About Sterlite Technologies?

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 Sterlite Technologies. 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 Sterlite Technologies' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Sterlite Technologies. The company's largest shareholder is Conclave PTC Limited, with ownership of 43%. HDFC Asset Management Company Limited is the second largest shareholder owning 3.5% of common stock, and Nippon Life India Asset Management Limited holds about 2.8% of the company stock.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Sterlite Technologies

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 most recent data indicates that insiders own some shares in Sterlite Technologies Limited. In their own names, insiders own ₹1.4b worth of stock in the ₹56b 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

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sterlite Technologies. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 43%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Take risks for example - Sterlite Technologies has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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.