Sharda Motor Industries Limited's (NSE:SHARDAMOTR) most bullish insider, Senior Key Executive Ajay Relan must be pleased with the recent 23% gain

Key Insights

• Insiders appear to have a vested interest in Sharda Motor Industries' growth, as seen by their sizeable ownership
• 58% of the company is held by a single shareholder (Ajay Relan)
• Institutions own 12% of Sharda Motor Industries

If you want to know who really controls Sharda Motor Industries Limited (NSE:SHARDAMOTR), then you'll have to look at the makeup of its share registry. With 65% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders were the biggest beneficiaries of last week’s 23% gain.

In the chart below, we zoom in on the different ownership groups of Sharda Motor Industries.

Check out our latest analysis for Sharda Motor Industries

What Does The Institutional Ownership Tell Us About Sharda Motor 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.

Sharda Motor Industries already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sharda Motor Industries, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Sharda Motor Industries. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Sharda Motor Industries' case, its Senior Key Executive, Ajay Relan, is the largest shareholder, holding 58% of shares outstanding. With 5.1% and 4.0% of the shares outstanding respectively, Aashim Relan and ICICI Prudential Asset Management Company Limited are the second and third largest shareholders. Interestingly, the second-largest shareholder, Aashim Relan is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Sharda Motor Industries

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the Sharda Motor Industries Limited stock. This gives them a lot of power. So they have a ₹34b stake in this ₹52b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 1 warning sign for Sharda Motor Industries that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.