Every investor in Muthoot Finance Limited (NSE:MUTHOOTFIN) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion’s share in the company with 73% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Despite selling some shares recently, insiders control a good portion of the company’s stock.
In the chart below, we zoom in on the different ownership groups of Muthoot Finance.
See our latest analysis for Muthoot Finance
What Does The Institutional Ownership Tell Us About Muthoot 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.
Muthoot Finance already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Muthoot Finance, (below). Of course, keep in mind that there are other factors to consider, too.
Muthoot Finance is not owned by hedge funds. With a 18% stake, CEO George Muthoot is the largest shareholder. With 15% and 7.2% of the shares outstanding respectively, George Muthoot and Sara George are the second and third largest shareholders. George Muthoot, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.
On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Muthoot Finance
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.
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 most recent data indicates that insiders own the majority of Muthoot Finance Limited. This means they can collectively make decisions for the company. Given it has a market cap of ₹436b, that means insiders have a whopping ₹320b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Muthoot Finance. 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:
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. For example, we’ve discovered 2 warning signs for Muthoot Finance (1 is significant!) that you should be aware of before investing here.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
