What Type Of Shareholders Make Up SMS Pharmaceuticals Limited's (NSE:SMSPHARMA) Share Registry?

A look at the shareholders of SMS Pharmaceuticals Limited (NSE:SMSPHARMA) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

SMS Pharmaceuticals is not a large company by global standards. It has a market capitalization of ₹11b, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. Let's take a closer look to see what the different types of shareholders can tell us about SMS Pharmaceuticals.

View our latest analysis for SMS Pharmaceuticals

What Does The Lack Of Institutional Ownership Tell Us About SMS Pharmaceuticals?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of SMS Pharmaceuticals, for yourself, below.

We note that hedge funds don't have a meaningful investment in SMS Pharmaceuticals. The company's CEO Ramesh Potluri is the largest shareholder with 36% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 8.7%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Vamsi Potluri is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of SMS Pharmaceuticals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the SMS Pharmaceuticals Limited stock. This gives them a lot of power. Given it has a market cap of ₹11b, that means they have ₹7.6b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 18% ownership, the general public have some degree of sway over SMS Pharmaceuticals. 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

It seems that Private Companies own 11%, of the SMS Pharmaceuticals 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 SMS Pharmaceuticals better, we need to consider many other factors. For example, we've discovered 3 warning signs for SMS Pharmaceuticals that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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