Shuja Mirza REDTAPE Limited's (NSE:REDTAPE) CEO is the most bullish insider, and their stock value gained 6.2%last week

Key Insights

• Insiders appear to have a vested interest in REDTAPE's growth, as seen by their sizeable ownership
• 58% of the company is held by a single shareholder (Shuja Mirza)
• Institutions own 14% of REDTAPE

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To get a sense of who is truly in control of REDTAPE Limited (NSE:REDTAPE), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 72% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week’s 6.2% gain.

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

See our latest analysis for REDTAPE

What Does The Institutional Ownership Tell Us About REDTAPE?

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 REDTAPE does have institutional investors; and they hold a good portion of the company's stock. 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 REDTAPE'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 REDTAPE. With a 58% stake, CEO Shuja Mirza is the largest shareholder. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. With 13% and 7.4% of the shares outstanding respectively, Rashid Mirza and ICICI Prudential Asset Management Company Limited are the second and third largest shareholders. Interestingly, the second-largest shareholder, Rashid Mirza is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of REDTAPE

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 the majority of REDTAPE Limited. This means they can collectively make decisions for the company. That means they own ₹60b worth of shares in the ₹83b company. That's quite meaningful. 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

The general public-- including retail investors -- own 14% 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for REDTAPE that you should be aware of.

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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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.