Lux Industries Limited's (NSE:LUXIND) most bullish insider is CEO Pradip Todi, and their holdings value went up by 10% last week

Key Insights

• Significant insider control over Lux Industries implies vested interests in company growth
• The top 3 shareholders own 60% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Lux Industries Limited (NSE:LUXIND), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders were the biggest beneficiaries of last week’s 10% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Lux Industries.

See our latest analysis for Lux Industries

What Does The Institutional Ownership Tell Us About Lux Industries?

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.

We can see that Lux Industries does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Lux Industries' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Lux Industries. With a 24% stake, CEO Pradip Todi is the largest shareholder. Ashok Todi is the second largest shareholder owning 24% of common stock, and Prabha Todi holds about 12% of the company stock. Interestingly, the second-largest shareholder, Ashok Todi is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 60% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Lux Industries

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders own more than half of Lux Industries Limited. This gives them effective control of the company. So they have a ₹33b stake in this ₹48b business. 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 16% stake in Lux Industries. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 6.2%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Lux Industries you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.