The recent 4.3% gain must have brightened Top Key Executive Rajat Agrawal's week, Gravita India Limited's (NSE:GRAVITA) most bullish insider

Key Insights

• Gravita India's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 64% of the company
• Institutional ownership in Gravita India is 13%

Every investor in Gravita India Limited (NSE:GRAVITA) 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 scored the highest last week as the company hit ₹176b market cap following a 4.3% gain in the stock.

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

View our latest analysis for Gravita India

What Does The Institutional Ownership Tell Us About Gravita 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.

Gravita India already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Gravita India's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Gravita India. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Gravita India's case, its Top Key Executive, Rajat Agrawal, is the largest shareholder, holding 39% of shares outstanding. With 25% and 2.2% of the shares outstanding respectively, Mahavir Agarwal and Ashish Kacholia are the second and third largest shareholders. Interestingly, the second-largest shareholder, Mahavir Agarwal is also Top 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Gravita India

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

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.

It seems that insiders own more than half the Gravita India Limited stock. This gives them a lot of power. Insiders own ₹117b worth of shares in the ₹176b company. That's extraordinary! Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Gravita 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 Gravita India you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.