Private companies who hold 46% of V.I.P. Industries Limited (NSE:VIPIND) gained 15%, institutions profited as well

Key Insights

• The considerable ownership by private companies in V.I.P. Industries indicates that they collectively have a greater say in management and business strategy
• The top 5 shareholders own 52% of the company
• Institutional ownership in V.I.P. Industries is 28%

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A look at the shareholders of V.I.P. Industries Limited (NSE:VIPIND) can tell us which group is most powerful. With 46% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Private companies gained the most after market cap touched ₹58b last week, while institutions who own 28% also benefitted.

Let's delve deeper into each type of owner of V.I.P. Industries, beginning with the chart below.

Check out our latest analysis for V.I.P. Industries

What Does The Institutional Ownership Tell Us About V.I.P. Industries?

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 V.I.P. Industries. 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. 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 V.I.P. Industries' historic earnings and revenue below, but keep in mind there's always more to the story.

V.I.P. Industries is not owned by hedge funds. The company's largest shareholder is Dgp Securities Limited, with ownership of 27%. With 13% and 7.0% of the shares outstanding respectively, Piramal Vibhuti Investments Limited and SBI Funds Management Limited are the second and third largest shareholders.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 V.I.P. Industries

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.

We can see that insiders own shares in V.I.P. Industries Limited. As individuals, the insiders collectively own ₹744m worth of the ₹58b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over V.I.P. Industries. 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

Our data indicates that Private Companies hold 46%, of the company's shares. 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 V.I.P. Industries better, we need to consider many other factors. Take risks for example - V.I.P. Industries has 1 warning sign we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.