After losing 1.3% in the past year, Kotak Mahindra Bank Limited (NSE:KOTAKBANK) institutional owners must be relieved by the recent gain

Key Insights

• Institutions' substantial holdings in Kotak Mahindra Bank implies that they have significant influence over the company's share price
• 50% of the business is held by the top 9 shareholders
• Insiders have sold recently

If you want to know who really controls Kotak Mahindra Bank Limited (NSE:KOTAKBANK), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week's ₹168b market cap gain would probably be appreciated by institutional investors, especially after a year of 1.3% losses.

In the chart below, we zoom in on the different ownership groups of Kotak Mahindra Bank.

Check out our latest analysis for Kotak Mahindra Bank

What Does The Institutional Ownership Tell Us About Kotak Mahindra 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.

Kotak Mahindra Bank already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Kotak Mahindra Bank's historic earnings and revenue below, but keep in mind there's always more to the story.

Kotak Mahindra Bank is not owned by hedge funds. Uday Kotak is currently the largest shareholder, with 26% of shares outstanding. With 7.4% and 5.3% of the shares outstanding respectively, Life Insurance Corporation of India, Asset Management Arm and SBI Funds Management Limited are the second and third largest shareholders.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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

Insider Ownership Of Kotak Mahindra Bank

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 circumstances.

Our information suggests that insiders maintain a significant holding in Kotak Mahindra Bank Limited. It is very interesting to see that insiders have a meaningful ₹958b stake in this ₹3.7t business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. 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. Take risks for example - Kotak Mahindra Bank has 1 warning sign we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.