Despite recent sales, NIIT Limited (NSE:NIITLTD) insiders remain the largest stockholders with 42% ownership

Simply Wall St · 10/15 00:06

Key Insights

  • Significant insider control over NIIT implies vested interests in company growth
  • The top 4 shareholders own 51% of the company
  • Recent sales by insiders

To get a sense of who is truly in control of NIIT Limited (NSE:NIITLTD), 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 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Despite recent sales, insiders own the most shares in the company. As a result, they stand to gain the most after the stock gained 11% in the past week.

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

View our latest analysis for NIIT

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NSEI:NIITLTD Ownership Breakdown October 15th 2024

What Does The Institutional Ownership Tell Us About NIIT?

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 NIIT does have institutional investors; and they hold a good portion of the company's stock. 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. 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 NIIT's historic earnings and revenue below, but keep in mind there's always more to the story.

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NSEI:NIITLTD Earnings and Revenue Growth October 15th 2024

NIIT is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In NIIT's case, its Top Key Executive, Vijay Thadani, is the largest shareholder, holding 18% of shares outstanding. With 18% and 8.2% of the shares outstanding respectively, Rajendra Pawar and Nippon Life India Asset Management Limited are the second and third largest shareholders. Interestingly, the second-largest shareholder, Rajendra Pawar is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 NIIT

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of NIIT Limited. Insiders own ₹10b worth of shares in the ₹24b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. 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 29% stake in NIIT. 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 5.7% stake in NIIT. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - NIIT has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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.