Despite selling recently, Ajanta Pharma Limited (NSE:AJANTPHARM) insiders own 53% stake and recent decline might have cost them

Key Insights

• Ajanta Pharma's significant insider ownership suggests inherent interests in company's expansion
• A total of 4 investors have a majority stake in the company with 53% ownership
• Recent sales by insiders

Every investor in Ajanta Pharma Limited (NSE:AJANTPHARM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, they were also the group to endure the biggest losses as the stock fell by 4.4%.

Let's delve deeper into each type of owner of Ajanta Pharma, beginning with the chart below.

See our latest analysis for Ajanta Pharma

What Does The Institutional Ownership Tell Us About Ajanta Pharma?

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 Ajanta Pharma. 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 Ajanta Pharma's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Ajanta Pharma. Our data suggests that Rajesh Agrawal, who is also the company's Co-Chief Executive Officer, holds the most number of shares at 14%. 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. With 14% and 13% of the shares outstanding respectively, Yogesh Agrawal and Ravi Agrawal are the second and third largest shareholders. Interestingly, the second-largest shareholder, Yogesh Agrawal is also Co-Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Ajanta Pharma

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the Ajanta Pharma Limited stock. This gives them a lot of power. Given it has a market cap of ₹401b, that means insiders have a whopping ₹214b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ajanta Pharma. 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 13%, of the Ajanta Pharma 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Ajanta Pharma , and understanding them should be part of your investment process.

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.