Despite recent sales, Dr. Lal PathLabs Limited (NSE:LALPATHLAB) insiders remain the largest stockholders with 56% ownership

Key Insights

• Significant insider control over Dr. Lal PathLabs implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 53% ownership
• Insiders have been selling lately

If you want to know who really controls Dr. Lal PathLabs Limited (NSE:LALPATHLAB), then you'll have to look at the makeup of its share registry. With 56% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Insiders own the top position in the company’s share registry despite recent sales and as a result, were the biggest beneficiaries of last week’s 5.3% gain.

Let's take a closer look to see what the different types of shareholders can tell us about Dr. Lal PathLabs.

View our latest analysis for Dr. Lal PathLabs

What Does The Institutional Ownership Tell Us About Dr. Lal PathLabs?

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.

We can see that Dr. Lal PathLabs does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Dr. Lal PathLabs' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Dr. Lal PathLabs. Our data suggests that Arvind Lal, who is also the company's Top Key Executive, holds the most number of shares at 33%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. In comparison, the second and third largest shareholders hold about 19% and 3.0% of the stock. Interestingly, the second-largest shareholder, Vandana Lal is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Dr. Lal PathLabs

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Dr. Lal PathLabs Limited. This gives them effective control of the company. Insiders own ₹100b worth of shares in the ₹177b company. That's extraordinary! 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

The general public-- including retail investors -- own 19% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Dr. Lal PathLabs better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Dr. Lal PathLabs .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.