Sundaram Finance Holdings Limited's (NSE:SUNDARMHLD) market cap dropped ₹6.4b last week; Individual investors bore the brunt

Key Insights

• Significant control over Sundaram Finance Holdings by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 21 shareholders own 50% of the company
• 24% of Sundaram Finance Holdings is held by insiders

A look at the shareholders of Sundaram Finance Holdings Limited (NSE:SUNDARMHLD) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 24% came under pressure after market cap dropped to ₹73b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Sundaram Finance Holdings.

Check out our latest analysis for Sundaram Finance Holdings

What Does The Institutional Ownership Tell Us About Sundaram Finance Holdings?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Sundaram Finance Holdings 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sundaram Finance Holdings' earnings history below. Of course, the future is what really matters.

Sundaram Finance Holdings is not owned by hedge funds. Our data shows that Sundaram Finance Limited is the largest shareholder with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.1% and 3.5%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 21 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Sundaram Finance Holdings

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. 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 maintain a significant holding in Sundaram Finance Holdings Limited. Insiders own ₹17b worth of shares in the ₹73b company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 9.0%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

Public companies currently own 20% of Sundaram Finance Holdings stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sundaram Finance Holdings , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.