Aarti Pharmalabs Limited's (NSE:AARTIPHARM) market cap rose ₹4.9b last week; retail investors who hold 32% profited and so did insiders

Key Insights

• Aarti Pharmalabs' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 20 investors have a majority stake in the company with 51% ownership
• Insiders have been selling lately

Our free stock report includes 2 warning signs investors should be aware of before investing in Aarti Pharmalabs. Read for free now.

A look at the shareholders of Aarti Pharmalabs Limited (NSE:AARTIPHARM) can tell us which group is most powerful. The group holding the most number of shares in the company, around 32% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that benefitted the most from last week’s ₹4.9b market cap gain, insiders too had a 29% share in those profits.

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

View our latest analysis for Aarti Pharmalabs

What Does The Institutional Ownership Tell Us About Aarti Pharmalabs?

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.

We can see that Aarti Pharmalabs does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Aarti Pharmalabs, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Aarti Pharmalabs. The company's largest shareholder is Life Insurance Corporation of India, Asset Management Arm, with ownership of 6.1%. With 4.2% and 3.5% of the shares outstanding respectively, Rashesh Gogri and Jaya Gogri are the second and third largest shareholders. Additionally, the company's CEO Hetal Gala directly holds 2.9% of the total shares outstanding.

A closer look at our ownership figures suggests that the top 20 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Aarti Pharmalabs

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.

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 maintain a significant holding in Aarti Pharmalabs Limited. Insiders have a ₹19b stake in this ₹66b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 32% 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.

Private Company Ownership

It seems that Private Companies own 18%, of the Aarti Pharmalabs stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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 Aarti Pharmalabs you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.