Painful week for individual investors invested in The Karur Vysya Bank Limited (NSE:KARURVYSYA) after 3.8% drop, institutions also suffered losses

Key Insights

• Significant control over Karur Vysya Bank by individual investors implies that the general public has more power to influence management and governance-related decisions
• 46% of the business is held by the top 25 shareholders
• Institutions own 45% of Karur Vysya Bank

Our free stock report includes 1 warning sign investors should be aware of before investing in Karur Vysya Bank. Read for free now.

To get a sense of who is truly in control of The Karur Vysya Bank Limited (NSE:KARURVYSYA), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 3.8% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 45% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Karur Vysya Bank.

View our latest analysis for Karur Vysya Bank

What Does The Institutional Ownership Tell Us About Karur Vysya Bank?

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.

As you can see, institutional investors have a fair amount of stake in Karur Vysya Bank. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Karur Vysya Bank, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Karur Vysya Bank. Looking at our data, we can see that the largest shareholder is HDFC Asset Management Company Limited with 6.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.3% and 4.1%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Karur Vysya 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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can report that insiders do own shares in The Karur Vysya Bank Limited. The insiders have a meaningful stake worth ₹9.3b. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Karur Vysya 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Karur Vysya Bank you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.