JM Financial Limited's (NSE:JMFINANCIL) large institutional owners must be happy as stock continues to impress, up 8.5% over the past week

Key Insights

• Institutions' substantial holdings in JM Financial implies that they have significant influence over the company's share price
• 53% of the business is held by the top 3 shareholders
• 20% of JM Financial is held by insiders

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If you want to know who really controls JM Financial Limited (NSE:JMFINANCIL), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 32% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained ₹7.1b in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 22%.

In the chart below, we zoom in on the different ownership groups of JM Financial.

Check out our latest analysis for JM Financial

What Does The Institutional Ownership Tell Us About JM Financial?

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.

JM Financial already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 JM Financial's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in JM Financial. JM Financial & Investment Consultancy Services Private Limited is currently the company's largest shareholder with 24% of shares outstanding. For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder. Furthermore, CEO Vishal Kampani is the owner of 1.5% of the company's shares.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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

Insider Ownership Of JM Financial

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 JM Financial Limited. It has a market capitalization of just ₹91b, and insiders have ₹18b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in JM Financial. 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.

Private Company Ownership

Our data indicates that Private Companies hold 27%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 5 warning signs we've spotted with JM Financial (including 1 which is potentially serious) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.