With a 69% stake, Caplin Point Laboratories Limited (NSE:CAPLIPOINT) insiders have a lot riding on the company

Key Insights

• Significant insider control over Caplin Point Laboratories implies vested interests in company growth
• The top 3 shareholders own 55% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

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Every investor in Caplin Point Laboratories Limited (NSE:CAPLIPOINT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 69% ownership. 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 Caplin Point Laboratories.

See our latest analysis for Caplin Point Laboratories

What Does The Institutional Ownership Tell Us About Caplin Point Laboratories?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Caplin Point Laboratories 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. 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 Caplin Point Laboratories' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Caplin Point Laboratories. P. Vijayalakshmi is currently the largest shareholder, with 25% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 19% and 12%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence 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 Caplin Point Laboratories

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Caplin Point Laboratories Limited. This gives them effective control of the company. That means insiders have a very meaningful ₹108b stake in this ₹156b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Caplin Point Laboratories. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.