Infibeam Avenues Limited (NSE:INFIBEAM) insiders still own 60% despite recent sales, but recent decline may have cost them

To get a sense of who is truly in control of Infibeam Avenues Limited (NSE:INFIBEAM), 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 60% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And our data suggests that insiders own the top position in the company’s share registry despite recent sales. As a result, the group bore the brunt of last week’s ₹4.0b market cap loss.

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

Check out our latest analysis for Infibeam Avenues

What Does The Institutional Ownership Tell Us About Infibeam Avenues?

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.

Infibeam Avenues already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Infibeam Avenues, (below). Of course, keep in mind that there are other factors to consider, too.

Infibeam Avenues is not owned by hedge funds. With a 12% stake, CEO Vishal Mehta is the largest shareholder. Vishwas Patel is the second largest shareholder owning 12% of common stock, and Ajit Mehta holds about 9.1% of the company stock. Interestingly, the second and third-largest shareholders also happen to be the Senior Key Executive and Chairman of the Board, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Infibeam Avenues

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that insiders own more than half of Infibeam Avenues Limited. This gives them effective control of the company. That means they own ₹33b worth of shares in the ₹55b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Infibeam Avenues. 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 15%, of the Infibeam Avenues stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Infibeam Avenues , and understanding them should be part of your investment process.

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.

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.

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