While institutions own 26% of Central Depository Services (India) Limited (NSE:CDSL), retail investors are its largest shareholders with 59% ownership

Key Insights

• The considerable ownership by retail investors in Central Depository Services (India) indicates that they collectively have a greater say in management and business strategy
• 39% of the business is held by the top 25 shareholders
• 26% of Central Depository Services (India) is held by Institutions

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Every investor in Central Depository Services (India) Limited (NSE:CDSL) should be aware of the most powerful shareholder groups. With 59% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Meanwhile, institutions make up 26% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

Let's delve deeper into each type of owner of Central Depository Services (India), beginning with the chart below.

See our latest analysis for Central Depository Services (India)

What Does The Institutional Ownership Tell Us About Central Depository Services (India)?

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.

As you can see, institutional investors have a fair amount of stake in Central Depository Services (India). 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. 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 Central Depository Services (India)'s earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Central Depository Services (India). Looking at our data, we can see that the largest shareholder is BSE Limited with 15% of shares outstanding. PPFAS Asset Management Private Limited is the second largest shareholder owning 4.6% of common stock, and Life Insurance Corporation of India, Asset Management Arm holds about 4.4% of the company stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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

Insider Ownership Of Central Depository Services (India)

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.

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 data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 59% stake in Central Depository Services (India), suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Public Company Ownership

We can see that public companies hold 15% of the Central Depository Services (India) shares on issue. 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.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.