With a 42% stake, Alkem Laboratories Limited (NSE:ALKEM) insiders have a lot riding on the company

Key Insights

• Alkem Laboratories' significant insider ownership suggests inherent interests in company's expansion
• A total of 5 investors have a majority stake in the company with 50% ownership
• 24% of Alkem Laboratories is held by Institutions

Every investor in Alkem Laboratories Limited (NSE:ALKEM) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

So it follows, every decision made by insiders of Alkem Laboratories regarding the company's future would be crucial to them.

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

View our latest analysis for Alkem Laboratories

What Does The Institutional Ownership Tell Us About Alkem Laboratories?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Alkem Laboratories already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Alkem Laboratories, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Alkem Laboratories. Samprada & Nanhamati Singh Family Trust is currently the largest shareholder, with 20% of shares outstanding. With 13% and 8.6% of the shares outstanding respectively, Basudeo Singh and Mritunjay Singh are the second and third largest shareholders. Two of the top three shareholders happen to be Top Key Executive and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

To make our study more interesting, we found that the top 5 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Alkem Laboratories

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.

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 maintain a significant holding in Alkem Laboratories Limited. It has a market capitalization of just ₹674b, and insiders have ₹286b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 12% stake in Alkem Laboratories. 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

Our data indicates that Private Companies hold 21%, of the company's shares. 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 1 warning sign for Alkem Laboratories 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.