Stock Analysis

While institutions own 29% of State Bank of India (NSE:SBIN), state or government are its largest shareholders with 57% ownership

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NSEI:SBIN
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A look at the shareholders of State Bank of India (NSE:SBIN) can tell us which group is most powerful. With 57% stake, state or government possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, institutions make up 29% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

Let's take a closer look to see what the different types of shareholders can tell us about State Bank of India.

However if you'd rather see where the opportunities and risks are within SBIN's industry, you can check out our analysis on the IN Banks industry.

ownership-breakdown
NSEI:SBIN Ownership Breakdown September 2nd 2022

What Does The Institutional Ownership Tell Us About State Bank of India?

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.

State Bank of India 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at State Bank of India's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NSEI:SBIN Earnings and Revenue Growth September 2nd 2022

We note that hedge funds don't have a meaningful investment in State Bank of India. India is currently the largest shareholder, with 57% of shares outstanding. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 8.5% and 2.8% of the stock.

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. 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 State Bank of India

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 data suggests that insiders own under 1% of State Bank of India in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own ₹24m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over State Bank of India. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with State Bank of India , and understanding them should be part of your investment process.

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.

Valuation is complex, but we're helping make it simple.

Find out whether State Bank of India is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NSEI:SBIN

State Bank of India

State Bank of India provides banking products and services to individuals, commercial enterprises, corporates, public bodies, and institutional customers in India and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth2
Past Performance3
Financial Health4
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Adequate balance sheet average dividend payer.