Institutions profited after Aditya Birla Sun Life AMC Limited's (NSE:ABSLAMC) market cap rose ₹4.8b last week but public companies profited the most

Key Insights

• Significant control over Aditya Birla Sun Life AMC by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 75% of the company
• Institutional ownership in Aditya Birla Sun Life AMC is 39%

A look at the shareholders of Aditya Birla Sun Life AMC Limited (NSE:ABSLAMC) can tell us which group is most powerful. The group holding the most number of shares in the company, around 49% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 3.3% increase in the stock price last week, public companies profited the most, but institutions who own 39% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about Aditya Birla Sun Life AMC.

Check out our latest analysis for Aditya Birla Sun Life AMC

What Does The Institutional Ownership Tell Us About Aditya Birla Sun Life AMC?

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.

Aditya Birla Sun Life AMC 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 Aditya Birla Sun Life AMC's historic earnings and revenue below, but keep in mind there's always more to the story.

Aditya Birla Sun Life AMC is not owned by hedge funds. Grasim Industries Limited is currently the company's largest shareholder with 45% of shares outstanding. For context, the second largest shareholder holds about 30% of the shares outstanding, followed by an ownership of 3.7% by the third-largest shareholder.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Aditya Birla Sun Life AMC

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.

Our most recent data indicates that insiders own less than 1% of Aditya Birla Sun Life AMC Limited. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₹6.6m worth of shares (at current prices). 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 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Aditya Birla Sun Life AMC. 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

Public companies currently own 49% of Aditya Birla Sun Life AMC stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Aditya Birla Sun Life AMC better, we need to consider many other factors. Take risks for example - Aditya Birla Sun Life AMC has 1 warning sign we think you should be aware of.

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.