Every investor in Biocon Limited (NSE:BIOCON) should know the most powerful shareholder groups. Big companies usually have institutions as shareholders, and we usually see insiders owning shares in small companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.
Biocon is a pretty big company. It has a market capitalization of ₹389b. Normally, institutions own a significant share of a business of this size. Our analysis of company ownership, below, shows that the institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Biocon.
See our latest analysis for Biocon
What does institutional ownership tell us about Biocon?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.
As you can see, institutional investors own a sizeable share of Biocon. This may indicate that the company has some degree of credibility in the investment community. However, it is better to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Biocon’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.
We note that hedge funds have no significant investment in Biocon. From our data, we infer that the largest shareholder is Kiran Mazumdar-Shaw (who also holds the title of Top Key Executive) with 40% of the shares outstanding. It’s generally considered a good sign when insiders hold a significant amount of stock in the company, and in that case, we’re happy to see a company insider act as a key stakeholder. In comparison, the second and third shareholders hold around 21% and 4.3% of the shares.
After digging a little deeper, we found that the 2 major shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence company decisions.
While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.
Biocon Insider Ownership
The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
It appears that insiders own more than half of the shares of Biocon Limited. It gives them a lot of power. Given that it has a market cap of ₹389 billion, that means insiders have a whopping ₹244 billion worth of shares in their own name. Good to see this level of investment. You can check here if these insiders have sold any of their shares.
General public property
With an 11% stake, the general public, consisting mainly of individual investors, has some influence over Biocon. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.
Ownership of a public company
It can be seen that public companies hold 4.3% of the Biocon shares issued. It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.
I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. For example, we found 1 warning sign for Biocon which you should be aware of before investing here.
At the end of the day the future is the most important. You can access this free analyst forecast report for the company.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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