What You Need To Know About Sterlite Technologies Limited's (NSE:STLTECH) Investor Composition

By
Simply Wall St
Published
April 09, 2022
NSEI:STLTECH
Source: Shutterstock

The big shareholder groups in Sterlite Technologies Limited (NSE:STLTECH) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that have been privatized tend to have low insider ownership.

With a market capitalization of ₹85b, Sterlite Technologies is a decent size, so it is probably on the radar of institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Sterlite Technologies.

See our latest analysis for Sterlite Technologies

ownership-breakdown
NSEI:STLTECH Ownership Breakdown April 9th 2022

What Does The Institutional Ownership Tell Us About Sterlite Technologies?

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

earnings-and-revenue-growth
NSEI:STLTECH Earnings and Revenue Growth April 9th 2022

Sterlite Technologies is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Twin Star Overseas Ltd. with 53% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. The second and third largest shareholders are Nippon Life India Asset Management Limited and Life Insurance Corporation of India, Asset Management Arm, with an equal amount of shares to their name at 3.3%.

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 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 Sterlite Technologies

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. 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.

We can see that insiders own shares in Sterlite Technologies Limited. This is a big company, so it is good to see this level of alignment. Insiders own ₹935m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sterlite Technologies. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 53%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sterlite Technologies better, we need to consider many other factors. Be aware that Sterlite Technologies is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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