Stock Analysis

Are Institutions Heavily Invested In Ujjivan Financial Services Limited's (NSE:UJJIVAN) Shares?

NSEI:UJJIVAN
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The big shareholder groups in Ujjivan Financial Services Limited (NSE:UJJIVAN) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that have been privatized tend to have low insider ownership.

Ujjivan Financial Services is a smaller company with a market capitalization of ₹27b, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Ujjivan Financial Services.

View our latest analysis for Ujjivan Financial Services

ownership-breakdown
NSEI:UJJIVAN Ownership Breakdown October 13th 2020

What Does The Institutional Ownership Tell Us About Ujjivan Financial Services?

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 Ujjivan Financial Services 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. 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 Ujjivan Financial Services' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NSEI:UJJIVAN Earnings and Revenue Growth October 13th 2020

Ujjivan Financial Services is not owned by hedge funds. Ardisia Limited is currently the largest shareholder, with 9.9% of shares outstanding. With 8.4% and 5.2% of the shares outstanding respectively, Alena Private Limited and NewQuest Capital Partners are the second and third largest shareholders.

After doing some more digging, we found that the top 15 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Ujjivan Financial Services

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

I can report that insiders do own shares in Ujjivan Financial Services Limited. It has a market capitalization of just ₹27b, and insiders have ₹360m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 48% ownership, the general public have some degree of sway over Ujjivan Financial Services. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 5.2%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 25%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Ujjivan Financial Services is showing 1 warning sign in our investment analysis , you should know about...

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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