The recent 7.4% gain must have brightened Top Key Executive Jitendra Mamtora's week, Transformers and Rectifiers (India) Limited's (NSE:TARIL) most bullish insider

Key Insights

• Significant insider control over Transformers and Rectifiers (India) implies vested interests in company growth
• 57% of the business is held by the top 3 shareholders
• Institutions own 11% of Transformers and Rectifiers (India)

Every investor in Transformers and Rectifiers (India) Limited (NSE:TARIL) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 70% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit ₹171b market cap following a 7.4% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Transformers and Rectifiers (India).

See our latest analysis for Transformers and Rectifiers (India)

What Does The Institutional Ownership Tell Us About Transformers and Rectifiers (India)?

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.

As you can see, institutional investors have a fair amount of stake in Transformers and Rectifiers (India). 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 Transformers and Rectifiers (India), (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Transformers and Rectifiers (India). From our data, we infer that the largest shareholder is Jitendra Mamtora (who also holds the title of Top Key Executive) with 38% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. The second and third largest shareholders are Satyen Mamtora and Karunaben Mamtora, with an equal amount of shares to their name at 9.5%. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Member of the Board of Directors, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Transformers and Rectifiers (India)

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 information suggests that insiders own more than half of Transformers and Rectifiers (India) Limited. This gives them effective control of the company. That means insiders have a very meaningful ₹120b stake in this ₹171b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Transformers and Rectifiers (India). 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Transformers and Rectifiers (India) you should be aware of, and 1 of them is a bit concerning.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.