Bajaj Finance Limited (NSE:BAJFINANCE) most popular amongst public companies who own 55% of the shares, institutions hold 24%

Key Insights

• Significant control over Bajaj Finance by public companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the company is held by a single shareholder (Bajaj Finserv Ltd.)
• Insiders have been selling lately

Every investor in Bajaj Finance Limited (NSE:BAJFINANCE) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutions on the other hand have a 24% ownership in the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.

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

View our latest analysis for Bajaj Finance

What Does The Institutional Ownership Tell Us About Bajaj Finance?

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 Bajaj Finance 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Bajaj Finance, (below). Of course, keep in mind that there are other factors to consider, too.

Bajaj Finance is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Bajaj Finserv Ltd. with 51% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.3% and 3.1% of the shares outstanding respectively, GIC Private Limited and Bajaj Holdings & Investment Limited are the second and third largest shareholders.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Bajaj Finance

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.

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 most recent data indicates that insiders own less than 1% of Bajaj Finance Limited. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own ₹8.2b of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Bajaj Finance. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 55% of Bajaj Finance 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 Bajaj Finance better, we need to consider many other factors. Take risks for example - Bajaj Finance has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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.