Vodafone Idea Limited (NSE:IDEA) share price fell 4.9% last week; public companies would not be happy
To get an idea of who really controls Vodafone Idea Limited (NSE: IDEA), it’s important to understand the ownership structure of the company. We can see that public companies hold the lion’s share of the company with 62% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).
And last week, public companies suffered the biggest losses, with the stock dropping 4.9%.
Let’s dig deeper into each type of Vodafone Idea owner, starting with the table below.
See our latest review for Vodafone Idea
What does institutional ownership tell us about Vodafone Idea?
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.
Less than 5% of Vodafone Idea is owned by institutional investors. This suggests that some funds have the company in their sights, but many have yet to buy shares. If the company is increasing its earnings, it may indicate that it is just beginning to attract the attention of those deep-pocketed investors. It is not uncommon to see a sharp rise in the stock price if several institutional investors attempt to buy a stock at the same time. So check out the historical earnings trajectory below, but keep in mind that it’s the future that matters most.
We note that hedge funds have no significant investment in Vodafone Idea. Our data shows that Vodafone Group Public Limited Company is the largest shareholder with 48% of the outstanding shares. In comparison, the second and third shareholders hold around 11% and 9.3% 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 it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.
Insider ownership of Vodafone Idea
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
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.
Shareholders would probably be interested to learn that insiders hold shares in Vodafone Idea Limited. This is a big company, so it’s good to see this level of alignment. Insiders own ₹26 billion worth of shares (at current prices). It’s good to see this level of investment by insiders. You can check here if these insiders have bought recently.
General public property
With a 20% stake, the general public, consisting mainly of individual investors, has some influence over Vodafone Idea. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.
Private Company Ownership
We can see that private companies hold 3.9% of the issued shares. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.
Ownership of a public company
We can see that public companies own 62% of outstanding Vodafone Idea shares. It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.
It is always useful to think about the different groups that own shares in a company. But to better understand Vodafone Idea, we need to consider many other factors. Take risks for example – Vodafone Idea has 4 warning signs (and 1 which is a little worrying) that we think you should know about.
If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.
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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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.