In spite of recent selling, insiders at NATCO Pharma Limited (NSE:NATCOPHARM) are the largest shareholders; own 30% shares

Key Insights

• Significant insider control over NATCO Pharma implies vested interests in company growth
• The top 6 shareholders own 51% of the company
• Insiders have been selling lately

If you want to know who really controls NATCO Pharma Limited (NSE:NATCOPHARM), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 30% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Despite recent sales, insiders own the most shares in the company. As a result, they stand to gain the most after the stock gained 3.8% in the past week.

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

See our latest analysis for NATCO Pharma

What Does The Institutional Ownership Tell Us About NATCO Pharma?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

Hedge funds don't have many shares in NATCO Pharma. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In NATCO Pharma's case, its Top Key Executive, Venkaiah Nannapaneni, is the largest shareholder, holding 25% of shares outstanding. With 9.6% and 8.8% of the shares outstanding respectively, Time Cap Pharma Labs Ltd. and Natsoft Information Systems Pvt. Ltd. are the second and third largest shareholders. Furthermore, CEO Rajeev Nannapaneni is the owner of 0.6% of the company's shares.

We did some more digging and found that 6 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 NATCO Pharma

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of NATCO Pharma Limited. It has a market capitalization of just ₹225b, and insiders have ₹67b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NATCO Pharma. 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 23%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand NATCO Pharma better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for NATCO Pharma (of which 1 is potentially serious!) you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.