Apparao Mallavarapu Centum Electronics Limited's (NSE:CENTUM) CEO is the most bullish insider, and their stock value gained 11%last week
Key Insights
- Centum Electronics' significant insider ownership suggests inherent interests in company's expansion
- 53% of the business is held by the top 3 shareholders
- Institutional ownership in Centum Electronics is 24%
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 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Clearly, insiders benefitted the most after the company's market cap rose by ₹3.4b last week.
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?
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.
Centum Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Centum Electronics' earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Centum Electronics. With a 36% stake, CEO Apparao Mallavarapu is the largest shareholder. With 9.7% and 7.5% of the shares outstanding respectively, HDFC Asset Management Company Limited and 3P Investment Managers Private Limited are the second and third largest shareholders.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Centum Electronics
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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. Given it has a market cap of ₹35b, that means they have ₹18b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 23% stake in Centum Electronics. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Centum Electronics is showing 1 warning sign in our investment analysis , you should know about...
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.