Following a 18% decline over last year, recent gains may please Suryoday Small Finance Bank Limited (NSE:SURYODAY) institutional owners

Key Insights

• Institutions' substantial holdings in Suryoday Small Finance Bank implies that they have significant influence over the company's share price
• A total of 13 investors have a majority stake in the company with 52% ownership
• Insiders have bought recently

To get a sense of who is truly in control of Suryoday Small Finance Bank Limited (NSE:SURYODAY), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 28% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's ₹1.6b market cap gain would probably be appreciated by institutional investors, especially after a year of 18% losses.

Let's delve deeper into each type of owner of Suryoday Small Finance Bank, beginning with the chart below.

View our latest analysis for Suryoday Small Finance Bank

What Does The Institutional Ownership Tell Us About Suryoday Small Finance 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.

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

Hedge funds don't have many shares in Suryoday Small Finance Bank. Looking at our data, we can see that the largest shareholder is the CEO Baskar Ramachandran with 5.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.9% and 4.6%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 52% implying that no single shareholder has a majority.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Suryoday Small Finance Bank

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 information suggests that insiders maintain a significant holding in Suryoday Small Finance Bank Limited. Insiders have a ₹3.3b stake in this ₹12b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Suryoday Small Finance 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

It seems that Private Companies own 24%, of the Suryoday Small Finance Bank stock. 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

Public companies currently own 5.5% of Suryoday Small Finance Bank stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.