CarTrade Tech Limited's (NSE:CARTRADE) last week's 12% decline must have disappointed private equity firms who have a significant stake (2024)

Key Insights

• CarTrade Tech's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 5 investors have a majority stake in the company with 51% ownership
• Institutional ownership in CarTrade Tech is 26%

A look at the shareholders of CarTrade Tech Limited (NSE:CARTRADE) can tell us which group is most powerful. We can see that private equity firms own the lion's share in the company with 40% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 12% decline in share price, private equity firms suffered the most losses.

Let's delve deeper into each type of owner of CarTrade Tech, beginning with the chart below.

View our latest analysis for CarTrade Tech

What Does The Institutional Ownership Tell Us About CarTrade Tech?

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.

CarTrade Tech already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 CarTrade Tech's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in CarTrade Tech. The company's largest shareholder is Warburg Pincus LLC, with ownership of 17%. Temasek Holdings (Private) Limited is the second largest shareholder owning 16% of common stock, and JP Morgan Asset Management holds about 7.4% of the company stock. Additionally, the company's CEO Vinay Sanghi directly holds 2.1% of the total shares outstanding.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of CarTrade Tech

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 circ*mstances.

We can see that insiders own shares in CarTrade Tech Limited. It has a market capitalization of just ₹30b, and insiders have ₹662m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 31% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CarTrade Tech. 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

With an ownership of 40%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for CarTrade Tech that 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.