With 31% ownership, Anand Rathi Wealth Limited (NSE:ANANDRATHI) insiders have a lot at stake
Key Insights
- Anand Rathi Wealth's significant insider ownership suggests inherent interests in company's expansion
- The top 7 shareholders own 52% of the company
- 12% of Anand Rathi Wealth is held by Institutions
Every investor in Anand Rathi Wealth Limited (NSE:ANANDRATHI) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 31% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).
With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.
In the chart below, we zoom in on the different ownership groups of Anand Rathi Wealth.
Check out our latest analysis for Anand Rathi Wealth
What Does The Institutional Ownership Tell Us About Anand Rathi Wealth?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Anand Rathi Wealth 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 Anand Rathi Wealth's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Anand Rathi Wealth. Looking at our data, we can see that the largest shareholder is Anand Rathi Financial Services Limited with 20% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 8.9% of the stock. Interestingly, the bottom two of the top three shareholders also hold the title of Top Key Executive and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company. Furthermore, CEO Rakesh Rawal is the owner of 1.1% of the company's shares.
We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Anand Rathi Wealth
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
Our most recent data indicates that insiders own a reasonable proportion of Anand Rathi Wealth Limited. It has a market capitalization of just ₹236b, and insiders have ₹73b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public, who are usually individual investors, hold a 30% stake in Anand Rathi Wealth. 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
We can see that Private Companies own 27%, of the shares on issue. 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. Take risks for example - Anand Rathi Wealth has 1 warning sign we think you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.