Individual investors invested in Avantel Limited (NSE:AVANTEL) copped the brunt of last week's ₹6.1b market cap decline

Key Insights

• Significant control over Avantel by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 13 investors have a majority stake in the company with 50% ownership
• Insiders own 46% of Avantel

A look at the shareholders of Avantel Limited (NSE:AVANTEL) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 15% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 46% stock also took a hit.

Let's delve deeper into each type of owner of Avantel, beginning with the chart below.

Check out our latest analysis for Avantel

What Does The Institutional Ownership Tell Us About Avantel?

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.

Less than 5% of Avantel is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

We note that hedge funds don't have a meaningful investment in Avantel. Looking at our data, we can see that the largest shareholder is the CEO Abburi Vidyasagar with 18% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.8% and 6.4% of the stock. Interestingly, the second-largest shareholder, Abburi Sagar is also Senior Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Avantel

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.

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.

It seems insiders own a significant proportion of Avantel Limited. Insiders have a ₹16b stake in this ₹36b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Avantel. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Avantel you should be aware of.

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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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.