Institutions along with individual investors who hold considerable shares inRBL Bank Limited (NSE:RBLBANK) come under pressure; lose 4.6% of holdings value

Key Insights

• The considerable ownership by individual investors in RBL Bank indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 49% ownership
• Institutions own 43% of RBL Bank

To get a sense of who is truly in control of RBL Bank Limited (NSE:RBLBANK), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 43% came under pressure after market cap dropped to ₹95b last week,individual investors took the most losses.

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

Check out our latest analysis for RBL Bank

What Does The Institutional Ownership Tell Us About RBL 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 RBL Bank does have institutional investors; and they hold a good portion of the company's stock. 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. 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 RBL Bank's historic earnings and revenue below, but keep in mind there's always more to the story.

RBL Bank is not owned by hedge funds. quant Money Managers Ltd. is currently the company's largest shareholder with 6.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.8% and 3.5%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of RBL Bank

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

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.

We can report that insiders do own shares in RBL Bank Limited. This is a big company, so it is good to see this level of alignment. Insiders own ₹3.6b worth of shares (at current prices). 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 45% stake in RBL 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.

Private Company Ownership

Our data indicates that Private Companies hold 4.8%, 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

It appears to us that public companies own 3.5% of RBL Bank. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with RBL Bank , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.