The recent 3.4% gain must have brightened Top Key Executive Venkaiah Nannapaneni's week, NATCO Pharma Limited's (NSE:NATCOPHARM) most bullish insider

Key Insights

• Insiders appear to have a vested interest in NATCO Pharma's growth, as seen by their sizeable ownership
• 50% of the business is held by the top 5 shareholders
• Institutions own 20% of NATCO Pharma

A look at the shareholders of NATCO Pharma Limited (NSE:NATCOPHARM) can tell us which group is most powerful. The group holding the most number of shares in the company, around 30% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by ₹5.7b last week.

In the chart below, we zoom in on the different ownership groups of NATCO Pharma.

View our latest analysis for NATCO Pharma

What Does The Institutional Ownership Tell Us About NATCO Pharma?

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 NATCO Pharma does have institutional investors; and they hold a good portion of the company's stock. 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. 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 NATCO Pharma's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in NATCO Pharma. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In NATCO Pharma's case, its Top Key Executive, Venkaiah Nannapaneni, is the largest shareholder, holding 25% of shares outstanding. Time Cap Pharma Labs Ltd. is the second largest shareholder owning 9.6% of common stock, and Natsoft Information Systems Pvt. Ltd. holds about 8.8% of the company stock. Additionally, the company's CEO Rajeev Nannapaneni directly holds 0.6% of the total shares outstanding.

On looking further, we found that 50% 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 NATCO Pharma

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of NATCO Pharma Limited. It has a market capitalization of just ₹177b, and insiders have ₹53b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NATCO Pharma. 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

We can see that Private Companies own 25%, 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. For instance, we've identified 1 warning sign for NATCO Pharma that you should be aware of.

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.