Are Institutions Heavily Invested In CarTrade Tech Limited's (NSE:CARTRADE) Shares?

By
Simply Wall St
Published
November 22, 2021
NSEI:CARTRADE
Source: Shutterstock

Every investor in CarTrade Tech Limited (NSE:CARTRADE) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.

CarTrade Tech is a smaller company with a market capitalization of ₹47b, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about CarTrade Tech.

View our latest analysis for CarTrade Tech

ownership-breakdown
NSEI:CARTRADE Ownership Breakdown November 23rd 2021

What Does The Institutional Ownership Tell Us About CarTrade Tech?

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.

CarTrade Tech already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at CarTrade Tech's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NSEI:CARTRADE Earnings and Revenue Growth November 23rd 2021

CarTrade Tech is not owned by hedge funds. Our data shows that Warburg Pincus LLC is the largest shareholder with 17% of shares outstanding. In comparison, the second and third largest shareholders hold about 16% and 7.5% of the stock. Furthermore, CEO Vinay Sanghi is the owner of 2.1% 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.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 CarTrade Tech

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.

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.

We can report that insiders do own shares in CarTrade Tech Limited. In their own names, insiders own ₹1.8b worth of stock in the ₹47b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CarTrade Tech. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 40% stake in CarTrade Tech. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand CarTrade Tech better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for CarTrade Tech you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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