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Insiders are the biggest winners as Banco Products (India) Limited (NSE:BANCOINDIA) market cap hits ₹14 billion

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key ideas

  • Significant insider control over Banco Products (India) involves vested interests in the growth of the business
  • 54% of the company is owned by a single shareholder (Mehul Patel)
  • Property research, combined with past performance data, can help provide a good understanding of a title’s opportunities

A look at the shareholders of Banco Products (India) Limited (NSE: BANCOINDIA) can tell us which group is the most powerful. We can see that individual insiders hold the lion’s share of the company with 69% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

As a result, insiders were the main beneficiaries of last week’s 11% gain.

Let’s dive deeper into each type of Banco Products (India) owner, starting with the table below.

Check out our latest analysis for Banco Products (India)

distribution of property
NSEI: Breakdown of ownership of BANCOINDIA as of December 31, 2022

What does the lack of institutional ownership of Banco (India) products tell us?

We don’t tend to see institutional investors owning stocks of very risky, lightly traded or very small companies. Although we sometimes see large companies without institutions listed on the register, this is not particularly common.

There are many reasons why a company may not have institutions listed in the share register. It can be difficult for institutions to buy large amounts of shares if liquidity (the amount of shares traded each day) is low. If the company did not need to raise capital, institutions might not have the opportunity to build a position. On the other hand, it’s always possible for professional investors to avoid a company because they think it’s not the best place for their money. Banco Products (India) may not have the type of past performance that institutions seek, or perhaps they just haven’t researched the business closely.

earnings-and-revenue-growth
NSEI: BANCOINDIA Earnings and Revenue Growth as of December 31, 2022

Hedge funds don’t have a lot of shares in Banco Products (India). Our data shows that Mehul Patel is the largest shareholder with 54% of shares outstanding. With such a stake in ownership, we infer that they have significant control over the future of the business. Meanwhile, the second and third largest shareholders hold 7.0% and 2.1% of the outstanding shares respectively.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.

Insider Ownership of Banco Products (India)

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our information suggests that insiders own more than half of Banco Products (India) Limited. This gives them effective control of the business. So they have a ₹9.9 billion stake in this ₹14 billion venture. Most would say this is a positive, showing strong alignment with shareholders. You can click here to see if these insiders have been buying or selling.

General public property

With a 27% stake, the general public, consisting mainly of individual investors, has some influence over Banco Products (India). Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Take risks for example – Banco Products (India) has 2 warning signs we think you should know.

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Valuation is complex, but we help make it simple.

Find out if Banco products (India) is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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