With 46% institutional ownership, Kotak Mahindra Bank Limited (NSE:KOTAKBANK) is a favorite amongst the big guns

Key Insights

• Significantly high institutional ownership implies Kotak Mahindra Bank's stock price is sensitive to their trading actions
• The top 9 shareholders own 51% of the company
• Insiders have sold recently

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A look at the shareholders of Kotak Mahindra Bank Limited (NSE:KOTAKBANK) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's delve deeper into each type of owner of Kotak Mahindra Bank, beginning with the chart below.

View our latest analysis for Kotak Mahindra Bank

What Does The Institutional Ownership Tell Us About Kotak Mahindra Bank?

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.

We can see that Kotak Mahindra Bank does have institutional investors; and they hold a good portion of the company's stock. 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 Kotak Mahindra Bank, (below). Of course, keep in mind that there are other factors to consider, too.

Kotak Mahindra Bank is not owned by hedge funds. Our data shows that Uday Kotak is the largest shareholder with 26% of shares outstanding. Life Insurance Corporation of India, Asset Management Arm is the second largest shareholder owning 7.4% of common stock, and SBI Funds Management Limited holds about 5.3% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 Kotak Mahindra 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.

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.

It seems insiders own a significant proportion of Kotak Mahindra Bank Limited. It has a market capitalization of just ₹4.2t, and insiders have ₹1.1t worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kotak Mahindra Bank. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Kotak Mahindra Bank better, we need to consider many other factors. For instance, we've identified 2 warning signs for Kotak Mahindra Bank (1 makes us a bit uncomfortable) 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.

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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.