IIFL Capital Services Limited's (NSE:IIFLSEC) market cap rose ₹4.2b last week; public companies who hold 27% profited and so did insiders

Key Insights

• Significant control over IIFL Capital Services by public companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 4 shareholders
• 26% of IIFL Capital Services is held by insiders

If you want to know who really controls IIFL Capital Services Limited (NSE:IIFLSEC), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are public companies with 27% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While public companies were the group that benefitted the most from last week’s ₹4.2b market cap gain, insiders too had a 26% share in those profits.

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

Check out our latest analysis for IIFL Capital Services

What Does The Institutional Ownership Tell Us About IIFL Capital Services?

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 IIFL Capital Services 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 IIFL Capital Services' historic earnings and revenue below, but keep in mind there's always more to the story.

IIFL Capital Services is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Fairfax India Holdings Corporation with 27% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 4.1% of the stock. Additionally, the company's CEO H. Nemkumar directly holds 0.6% of the total shares outstanding.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of IIFL Capital Services

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in IIFL Capital Services Limited. It has a market capitalization of just ₹103b, and insiders have ₹27b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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 9.0%, of the IIFL Capital Services stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 27% of the IIFL Capital Services shares on issue. 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 IIFL Capital Services better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for IIFL Capital Services (of which 1 is significant!) you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.