Public companies account for 54% of Firstsource Solutions Limited's (NSE:FSL) ownership, while institutions account for 26%

Key Insights

• Significant control over Firstsource Solutions by public companies implies that the general public has more power to influence management and governance-related decisions
• RPSG Ventures Limited owns 54% of the company
• Insiders have been selling lately

A look at the shareholders of Firstsource Solutions Limited (NSE:FSL) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are public companies with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, institutions make up 26% of the company’s shareholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

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

Check out our latest analysis for Firstsource Solutions

What Does The Institutional Ownership Tell Us About Firstsource Solutions?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Firstsource Solutions 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. 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 Firstsource Solutions' historic earnings and revenue below, but keep in mind there's always more to the story.

Firstsource Solutions is not owned by hedge funds. Our data shows that RPSG Ventures Limited is the largest shareholder with 54% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 8.9% and 2.2%, of the shares outstanding, respectively.

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 Firstsource Solutions

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

Our data suggests that insiders own under 1% of Firstsource Solutions Limited in their own names. Keep in mind that it's a big company, and the insiders own ₹1.1b worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Firstsource Solutions. 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.

Public Company Ownership

It appears to us that public companies own 54% of Firstsource Solutions. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Firstsource Solutions better, we need to consider many other factors. For example, we've discovered 1 warning sign for Firstsource Solutions that you should be aware of before investing here.

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.