Institutional investors have a lot riding on Equitas Small Finance Bank Limited (NSE:EQUITASBNK) with 53% ownership

Key Insights

• Institutions' substantial holdings in Equitas Small Finance Bank implies that they have significant influence over the company's share price
• A total of 12 investors have a majority stake in the company with 50% ownership
• Insiders have been selling lately

A look at the shareholders of Equitas Small Finance Bank Limited (NSE:EQUITASBNK) can tell us which group is most powerful. The group holding the most number of shares in the company, around 53% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit ₹96b in market cap. The one-year return on investment is currently 110% and last week's gain would have been more than welcomed.

Let's delve deeper into each type of owner of Equitas Small Finance Bank, beginning with the chart below.

See our latest analysis for Equitas Small Finance Bank

What Does The Institutional Ownership Tell Us About Equitas Small Finance Bank?

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.

Equitas Small Finance Bank 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. 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 Equitas Small Finance Bank, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Equitas Small Finance Bank is not owned by hedge funds. The company's largest shareholder is Franklin Resources, Inc., with ownership of 7.1%. SBI Funds Management Limited is the second largest shareholder owning 6.8% of common stock, and DSP Investment Managers Pvt. Ltd. holds about 6.0% of the company stock. Additionally, the company's CEO Pathangi Vasudevan directly holds 1.7% of the total shares outstanding.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Equitas Small Finance Bank

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. 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.

Our most recent data indicates that insiders own some shares in Equitas Small Finance Bank Limited. The insiders have a meaningful stake worth ₹5.4b. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 35% stake in Equitas Small Finance Bank. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 4.8%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. For example, we've discovered 3 warning signs for Equitas Small Finance Bank (1 is concerning!) that you should be aware of before investing here.

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.

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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.