Despite recent sales, Roto Pumps Limited (NSE:ROTO) insiders own 68% shares but recent downturn may have set them back

Key Insights

• Significant insider control over Roto Pumps implies vested interests in company growth
• 57% of the business is held by the top 5 shareholders
• Recent sales by insiders

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To get a sense of who is truly in control of Roto Pumps Limited (NSE:ROTO), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, they were also the group to endure the biggest losses as the stock fell by 12%.

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

Check out our latest analysis for Roto Pumps

What Does The Institutional Ownership Tell Us About Roto Pumps?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Since institutions own only a small portion of Roto Pumps, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Roto Pumps. Looking at our data, we can see that the largest shareholder is the CEO Harish Gupta with 17% of shares outstanding. Asha Gupta is the second largest shareholder owning 16% of common stock, and Arvind Gupta holds about 8.2% of the company stock. Interestingly, the third-largest shareholder, Arvind Gupta is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Roto Pumps

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.

Our information suggests that insiders own more than half of Roto Pumps Limited. This gives them effective control of the company. Given it has a market cap of ₹11b, that means they have ₹7.4b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Roto Pumps. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Roto Pumps better, we need to consider many other factors. Take risks for example - Roto Pumps has 1 warning sign we think 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.