Azad Engineering Limited's (NSE:AZAD) most bullish insider is CEO Rakesh Chopdar, and their holdings value went up by 4.3% last week
Key Insights
- Significant insider control over Azad Engineering implies vested interests in company growth
- Rakesh Chopdar owns 55% of the company
- 21% of Azad Engineering is held by Institutions
A look at the shareholders of Azad Engineering Limited (NSE:AZAD) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 58% 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 scored the highest last week as the company hit ₹108b market cap following a 4.3% gain in the stock.
In the chart below, we zoom in on the different ownership groups of Azad Engineering.
Check out our latest analysis for Azad Engineering
What Does The Institutional Ownership Tell Us About Azad Engineering?
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.
As you can see, institutional investors have a fair amount of stake in Azad Engineering. 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. 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 Azad Engineering, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Azad Engineering. The company's CEO Rakesh Chopdar is the largest shareholder with 55% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. For context, the second largest shareholder holds about 4.6% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder.
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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Azad Engineering
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
It seems that insiders own more than half the Azad Engineering Limited stock. This gives them a lot of power. That means insiders have a very meaningful ₹62b stake in this ₹108b business. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 22% 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:
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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Azad Engineering you should know about.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.