The recent 10% gain must have brightened Senior Key Executive Vikas Agarwal's week, Prostarm Info Systems Limited's (NSE:PROSTARM) most bullish insider

Key Insights

• Significant insider control over Prostarm Info Systems implies vested interests in company growth
• A total of 3 investors have a majority stake in the company with 60% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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Every investor in Prostarm Info Systems Limited (NSE:PROSTARM) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 67% to be precise, is individual insiders. 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 10% gain.

Let's delve deeper into each type of owner of Prostarm Info Systems, beginning with the chart below.

Check out our latest analysis for Prostarm Info Systems

What Does The Lack Of Institutional Ownership Tell Us About Prostarm Info Systems?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Prostarm Info Systems, for yourself, below.

Hedge funds don't have many shares in Prostarm Info Systems. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Prostarm Info Systems' case, its Senior Key Executive, Vikas Agarwal, is the largest shareholder, holding 24% of shares outstanding. For context, the second largest shareholder holds about 21% of the shares outstanding, followed by an ownership of 15% by the third-largest shareholder. Interestingly, the second-largest shareholder, Ram Agarwal is also Chief Executive Officer, 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Prostarm Info Systems

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the Prostarm Info Systems Limited stock. This gives them a lot of power. Given it has a market cap of ₹12b, that means they have ₹8.0b worth of shares. 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 29% stake in the company, and hence can't easily be ignored. 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 3.3%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. Be aware that Prostarm Info Systems is showing 2 warning signs in our investment analysis , you should know about...

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.