Finolex Cables Limited's (NSE:FINCABLES) market cap touched ₹116b last week, benefiting both private companies who own 31% as well as institutions
Key Insights
- Significant control over Finolex Cables by private companies implies that the general public has more power to influence management and governance-related decisions
- 52% of the business is held by the top 4 shareholders
- Insider ownership in Finolex Cables is 11%
To get a sense of who is truly in control of Finolex Cables Limited (NSE:FINCABLES), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 31% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While private companies were the group that reaped the most benefits after last week’s 5.7% price gain, institutions also received a 22% cut.
Let's delve deeper into each type of owner of Finolex Cables, beginning with the chart below.
Check out our latest analysis for Finolex Cables
What Does The Institutional Ownership Tell Us About Finolex Cables?
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.
Finolex Cables already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Finolex Cables' earnings history below. Of course, the future is what really matters.
Finolex Cables is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Orbit Electricals Pvt. Limited with 31% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 3.2%, of the shares outstanding, respectively.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.
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 Finolex Cables
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. 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.
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.
Our information suggests that insiders maintain a significant holding in Finolex Cables Limited. Insiders own ₹13b worth of shares in the ₹116b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 21% stake in Finolex Cables. 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 31%, of the Finolex Cables stock. 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.
Public Company Ownership
It appears to us that public companies own 15% of Finolex Cables. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Finolex Cables .
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.