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Private companies in Vardhman Textiles Limited (NSE:VTL) are its biggest bettors, and their bets paid off as stock gained 7.4% last week


A look at the shareholders of Vardhman Textiles Limited (NSE:VTL) can tell us which group is most powerful. With 34% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies collectively scored the highest last week as the company hit ₹92b market cap following a 7.4% gain in the stock.

Let’s take a closer look to see what the different types of shareholders can tell us about Vardhman Textiles.

See our latest analysis for Vardhman Textiles

ownership-breakdown
NSEI:VTL Ownership Breakdown August 5th 2022

What Does The Institutional Ownership Tell Us About Vardhman Textiles?

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.

Vardhman Textiles already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Vardhman Textiles’ historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growth
NSEI:VTL Earnings and Revenue Growth August 5th 2022

Vardhman Textiles is not owned by hedge funds. Vardhman Holdings Limited is currently the largest shareholder, with 28% of shares outstanding. In comparison, the second and third largest shareholders hold about 18% and 11% of the stock. Additionally, the company’s CEO Shri Oswal directly holds 1.0% of the total shares outstanding.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Vardhman Textiles

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Shareholders would probably be interested to learn that insiders own shares in Vardhman Textiles Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around ₹1.7b 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 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Vardhman Textiles. 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.

Private Company Ownership

It seems that Private Companies own 34%, of the Vardhman Textiles 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

Public companies currently own 28% of Vardhman Textiles stock. We can’t be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Vardhman Textiles better, we need to consider many other factors. For example, we’ve discovered 2 warning signs for Vardhman Textiles (1 can’t be ignored!) that you should be aware of before investing here.

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.

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.



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