Individual investors are Aarti Pharmalabs Limited's (NSE:AARTIPHARM) biggest owners and were hit after market cap dropped ₹4.7b

Key Insights

• The considerable ownership by individual investors in Aarti Pharmalabs indicates that they collectively have a greater say in management and business strategy
• A total of 20 investors have a majority stake in the company with 50% ownership
• Insiders own 28% of Aarti Pharmalabs

If you want to know who really controls Aarti Pharmalabs Limited (NSE:AARTIPHARM), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 28% came under pressure after market cap dropped to ₹46b last week,individual investors took the most losses.

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

See 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Aarti Pharmalabs' historic earnings and revenue below, but keep in mind there's always more to the story.

Aarti Pharmalabs is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Life Insurance Corporation of India, Asset Management Arm with 6.8% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.2% and 3.3%, of the shares outstanding, respectively. In addition, we found that Hetal Gala, the CEO has 2.9% of the shares allocated to their name.

After doing some more digging, we found that the top 20 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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. It has a market capitalization of just ₹46b, and insiders have ₹13b worth of shares in their own names. 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 33% 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.

Private Company Ownership

Our data indicates that Private Companies hold 21%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Aarti Pharmalabs is showing 1 warning sign in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.