Institutional investors have a lot riding on IndoStar Capital Finance Limited (NSE:INDOSTAR) with 59% ownership

Key Insights

• Given the large stake in the stock by institutions, IndoStar Capital Finance's stock price might be vulnerable to their trading decisions
• The largest shareholder of the company is Brookfield Corporation with a 56% stake
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of IndoStar Capital Finance Limited (NSE:INDOSTAR) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit ₹24b in market cap. The one-year return on investment is currently 14% and last week's gain would have been more than welcomed.

Let's delve deeper into each type of owner of IndoStar Capital Finance, beginning with the chart below.

See our latest analysis for IndoStar Capital Finance

What Does The Institutional Ownership Tell Us About IndoStar Capital 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 IndoStar Capital 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. 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 IndoStar Capital Finance's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. IndoStar Capital Finance is not owned by hedge funds. Our data shows that Brookfield Corporation is the largest shareholder with 56% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. IndoStar Capital (Mauritius) is the second largest shareholder owning 17% of common stock, and Madhuri Kela holds about 2.5% of the company stock.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of IndoStar Capital Finance

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

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.

We can report that insiders do own shares in IndoStar Capital Finance Limited. In their own names, insiders own ₹596m worth of stock in the ₹24b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over IndoStar Capital Finance. 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

Our data indicates that Private Companies hold 19%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand IndoStar Capital Finance better, we need to consider many other factors. For instance, we've identified 1 warning sign for IndoStar Capital Finance that you should be aware of.

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.