With 49% ownership in Divi's Laboratories Limited (NSE:DIVISLAB), insiders continue to have the largest holding even though they have sold shares recently

Key Insights

• Significant insider control over Divi's Laboratories implies vested interests in company growth
• The top 4 shareholders own 52% of the company
• Insiders have sold recently

A look at the shareholders of Divi's Laboratories Limited (NSE:DIVISLAB) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 49% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Despite recent sales, insiders own the most shares in the company.

In the chart below, we zoom in on the different ownership groups of Divi's Laboratories.

View our latest analysis for Divi's Laboratories

What Does The Institutional Ownership Tell Us About Divi's 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.

As you can see, institutional investors have a fair amount of stake in Divi's Laboratories. 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 Divi's Laboratories' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Divi's Laboratories. With a 20% stake, CEO Kiran Divi is the largest shareholder. In comparison, the second and third largest shareholders hold about 20% and 6.0% of the stock.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. 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 Divi's 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.

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 Divi's Laboratories Limited. It has a market capitalization of just ₹1.5t, and insiders have ₹759b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 3.0%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Divi's Laboratories better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Divi's Laboratories you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.