In spite of recent selling, insiders still control 30% of NATCO Pharma Limited (NSE:NATCOPHARM)

Key Insights

• NATCO Pharma's significant insider ownership suggests inherent interests in company's expansion
• The top 6 shareholders own 52% of the company
• Recent sales by insiders

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. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Even though insiders have sold shares recently, the group owns the most numbers of shares in the company.

In the chart below, we zoom in on the different ownership groups of NATCO Pharma.

View our latest analysis for NATCO Pharma

What Does The Institutional Ownership Tell Us About NATCO Pharma?

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.

We can see that NATCO Pharma does have institutional investors; and they hold a good portion of the company's stock. 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. 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.

We note that hedge funds don't have a meaningful investment in NATCO Pharma. Our data suggests that Venkaiah Nannapaneni, who is also the company's Top Key Executive, holds the most number of shares at 25%. 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. In comparison, the second and third largest shareholders hold about 9.6% and 8.8% of the stock. Furthermore, CEO Rajeev Nannapaneni is the owner of 0.6% of the company's shares.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 NATCO Pharma

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 most recent data indicates that insiders own a reasonable proportion of NATCO Pharma Limited. It is very interesting to see that insiders have a meaningful ₹82b stake in this ₹275b business. 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 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NATCO Pharma. 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

It seems that Private Companies own 25%, of the NATCO Pharma stock. 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 3 warning signs for NATCO Pharma (of which 1 is a bit unpleasant!) 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.