Owning 75% in Zydus Lifesciences Limited (NSE:ZYDUSLIFE) means that insiders are heavily invested in the company's future
Key Insights
- Insiders appear to have a vested interest in Zydus Lifesciences' growth, as seen by their sizeable ownership
- Pankaj Patel owns 75% of the company
- Institutions own 14% of Zydus Lifesciences
To get a sense of who is truly in control of Zydus Lifesciences Limited (NSE:ZYDUSLIFE), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 75% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
So it follows, every decision made by insiders of Zydus Lifesciences regarding the company's future would be crucial to them.
Let's take a closer look to see what the different types of shareholders can tell us about Zydus Lifesciences.
See our latest analysis for Zydus Lifesciences
What Does The Institutional Ownership Tell Us About Zydus Lifesciences?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Zydus Lifesciences 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. 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 Zydus Lifesciences' historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Zydus Lifesciences. Looking at our data, we can see that the largest shareholder is Pankaj Patel with 75% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Life Insurance Corporation of India is the second largest shareholder owning 5.3% of common stock, and PPFAS Asset Management Private Limited holds about 1.6% of the company stock.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Zydus Lifesciences
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 most recent data indicates that insiders own the majority of Zydus Lifesciences Limited. This means they can collectively make decisions for the company. Given it has a market cap of ₹923b, that means insiders have a whopping ₹692b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Zydus Lifesciences better, we need to consider many other factors. For instance, we've identified 2 warning signs for Zydus Lifesciences (1 doesn't sit too well with us) that 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.