Stock Analysis
- India
- /
- Consumer Finance
- /
- NSEI:SUNDARMFIN
Sundaram Finance Limited (NSE:SUNDARMFIN) surges 5.8%; individual investors who own 55% shares profited along with insiders
Key Insights
- The considerable ownership by individual investors in Sundaram Finance indicates that they collectively have a greater say in management and business strategy
- 32% of the business is held by the top 25 shareholders
- Insiders own 25% of Sundaram Finance
To get a sense of who is truly in control of Sundaram Finance Limited (NSE:SUNDARMFIN), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 55% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While individual investors were the group that reaped the most benefits after last week’s 5.8% price gain, insiders also received a 25% cut.
Let's take a closer look to see what the different types of shareholders can tell us about Sundaram Finance.
Check out our latest analysis for Sundaram Finance
What Does The Institutional Ownership Tell Us About Sundaram 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.
As you can see, institutional investors have a fair amount of stake in Sundaram Finance. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Sundaram Finance's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Sundaram Finance. Axis Asset Management Company Limited is currently the company's largest shareholder with 2.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.6% and 2.5%, of the shares outstanding, respectively.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Sundaram 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. 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.
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 Sundaram Finance Limited. It has a market capitalization of just ₹483b, and insiders have ₹123b worth of shares in their own names. That's quite significant. 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, who are usually individual investors, hold a substantial 55% stake in Sundaram Finance, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Private Company Ownership
It seems that Private Companies own 4.4%, of the Sundaram Finance stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 2 warning signs we've spotted with Sundaram Finance (including 1 which can't be ignored) .
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.
About NSEI:SUNDARMFIN
Sundaram Finance
Operates as a non-banking finance company in India.