HDFC Life Insurance Company Limited's (NSE:HDFCLIFE) top owners are public companies with 54% stake, while 27% is held by institutions

Key Insights

• The considerable ownership by public companies in HDFC Life Insurance indicates that they collectively have a greater say in management and business strategy
• HDFC Bank Limited owns 50% of the company
• Institutional ownership in HDFC Life Insurance is 27%

To get a sense of who is truly in control of HDFC Life Insurance Company Limited (NSE:HDFCLIFE), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 54% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

And institutions on the other hand have a 27% ownership in the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

Let's take a closer look to see what the different types of shareholders can tell us about HDFC Life Insurance.

See our latest analysis for HDFC Life Insurance

What Does The Institutional Ownership Tell Us About HDFC Life Insurance?

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.

HDFC Life Insurance already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 HDFC Life Insurance, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in HDFC Life Insurance. The company's largest shareholder is HDFC Bank Limited, with ownership of 50%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 4.0% and 3.3% of the shares outstanding respectively, Exide Industries Limited and ICICI Prudential Asset Management Company Limited are the second and third largest shareholders.

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 HDFC Life Insurance

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.

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 HDFC Life Insurance Company Limited. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own ₹2.6b of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over HDFC Life Insurance. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 54% of HDFC Life Insurance stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for HDFC Life Insurance you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.