Manappuram Finance Limited (NSE:MANAPPURAM) CEO Vazhappully Nandakumar, the company's largest shareholder sees 3.1% reduction in holdings value

Key Insights

• Insiders appear to have a vested interest in Manappuram Finance's growth, as seen by their sizeable ownership
• The top 7 shareholders own 50% of the company
• Institutional ownership in Manappuram Finance is 35%

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Every investor in Manappuram Finance Limited (NSE:MANAPPURAM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 36% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 3.1% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Manappuram Finance.

See our latest analysis for Manappuram Finance

What Does The Institutional Ownership Tell Us About Manappuram Finance?

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.

We can see that Manappuram Finance 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. 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 Manappuram Finance, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Manappuram Finance. With a 35% stake, CEO Vazhappully Nandakumar is the largest shareholder. Capital Research and Management Company is the second largest shareholder owning 6.1% of common stock, and BNP Paribas Arbitrage Sa, Asset Management Arm holds about 2.2% of the company stock.

We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Manappuram Finance

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Manappuram Finance Limited. It is very interesting to see that insiders have a meaningful ₹81b stake in this ₹228b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. 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.

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 3 warning signs we've spotted with Manappuram Finance (including 1 which doesn't sit too well with us) .

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.