Nava Limited's (NSE:NAVA) stock price dropped 7.2% last week; retail investors would not be happy

Key Insights

• Significant control over Nava by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 15 investors have a majority stake in the company with 51% ownership
• Recent purchases by insiders

A look at the shareholders of Nava Limited (NSE:NAVA) can tell us which group is most powerful. The group holding the most number of shares in the company, around 42% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, retail investors endured the biggest losses as the stock fell by 7.2%.

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

Check out our latest analysis for Nava

What Does The Institutional Ownership Tell Us About Nava?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Nava already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Nava's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Nava. Our data shows that Nav Finance & Leasing Ltd is the largest shareholder with 11% of shares outstanding. A N Investment Pvt Ltd is the second largest shareholder owning 6.5% of common stock, and S RT Investments Pvt Ltd holds about 5.4% of the company stock. Additionally, the company's CEO Ashwin Devineni directly holds 2.4% of the total shares outstanding.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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

Insider Ownership Of Nava

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own a reasonable proportion of Nava Limited. It has a market capitalization of just ₹133b, and insiders have ₹25b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Nava. 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

Our data indicates that Private Companies hold 33%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 1 warning sign for Nava you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.