Tatva Chintan Pharma Chem Limited's (NSE:TATVA) Senior Key Executive Ajaykumar Patel is the most upbeat insider, and their holdings increased by 11% last week

Key Insights

• Significant insider control over Tatva Chintan Pharma Chem implies vested interests in company growth
• The top 3 shareholders own 72% of the company
• Institutional ownership in Tatva Chintan Pharma Chem is 14%

To get a sense of who is truly in control of Tatva Chintan Pharma Chem Limited (NSE:TATVA), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 72% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by ₹2.0b last week.

Let's take a closer look to see what the different types of shareholders can tell us about Tatva Chintan Pharma Chem.

View our latest analysis for Tatva Chintan Pharma Chem

What Does The Institutional Ownership Tell Us About Tatva Chintan Pharma Chem?

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.

As you can see, institutional investors have a fair amount of stake in Tatva Chintan Pharma Chem. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Tatva Chintan Pharma Chem's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Tatva Chintan Pharma Chem. From our data, we infer that the largest shareholder is Ajaykumar Patel (who also holds the title of Senior Key Executive) with 24% 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 Shekhar Somani and Chintan Shah, with an equal amount of shares to their name at 24%. Note that two of the top three shareholders are also Senior Key Executive and Chairman of the Board, respectively, once again pointing to significant ownership by company insiders.

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.

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 Tatva Chintan Pharma Chem

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. 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.

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 Tatva Chintan Pharma Chem Limited. This gives them effective control of the company. Given it has a market cap of ₹21b, that means they have ₹15b worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Tatva Chintan Pharma Chem better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Tatva Chintan Pharma Chem .

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.