Both state or government who control a good portion of Power Finance Corporation Limited (NSE:PFC) along with institutions must be dismayed after last week's 3.7% decrease

Key Insights

• Power Finance's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• The Republic of India owns 56% of the company
• Institutional ownership in Power Finance is 24%

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Every investor in Power Finance Corporation Limited (NSE:PFC) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 57% to be precise, is state or government. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 24% shares weren’t spared from last week’s ₹45b market cap drop, state or government as a group suffered the maximum losses

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

View our latest analysis for Power Finance

What Does The Institutional Ownership Tell Us About Power Finance?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

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

Power Finance is not owned by hedge funds. The company's largest shareholder is The Republic of India, with ownership of 56%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 2.1% and 2.1% of the shares outstanding respectively, Kotak Mahindra Asset Management Company Limited and Life Insurance Corporation of India are the second and third largest shareholders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Power Finance

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. 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 most recent data indicates that insiders own less than 1% of Power Finance Corporation Limited. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own ₹15m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Power Finance. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Power Finance better, we need to consider many other factors. For instance, we've identified 3 warning signs for Power Finance (2 are concerning) that you should be aware of.

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.