Institutional owners may ignore Suryoday Small Finance Bank Limited's (NSE:SURYODAY) recent ₹2.2b market cap decline as longer-term profits stay in the green

Key Insights

• Given the large stake in the stock by institutions, Suryoday Small Finance Bank's stock price might be vulnerable to their trading decisions
• A total of 13 investors have a majority stake in the company with 50% ownership
• Insider ownership in Suryoday Small Finance Bank is 27%

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 30% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors was the group most impacted after the company's market cap fell to ₹19b last week. However, the 70% one-year return to shareholders may have helped lessen their pain. But they would probably be wary of future losses.

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

Check out 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.

We can see that Suryoday Small Finance Bank does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Suryoday Small Finance Bank's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Suryoday Small Finance Bank. Looking at our data, we can see that the largest shareholder is Ashiana Trust with 5.9% of shares outstanding. With 5.0% and 4.4% of the shares outstanding respectively, Baskar Ramachandran and Axis Asset Management Company Limited are the second and third largest shareholders. Baskar Ramachandran, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

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. 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.

It seems insiders own a significant proportion of Suryoday Small Finance Bank Limited. It has a market capitalization of just ₹19b, and insiders have ₹5.1b worth of shares in their own names. 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

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 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. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

It appears to us that public companies own 4.0% of Suryoday Small Finance Bank. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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 access this interactive graph of past earnings, revenue and cash flow, for free.

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.