To get a sense of who is truly in control of Indiabulls Housing Finance Limited (NSE:IBULHSGFIN), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 39% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to ₹59b last week after a 6.4% drop in the share price. The recent loss, which adds to a one-year loss of 35% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Indiabulls Housing Finance which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Indiabulls Housing Finance.
Check out our latest analysis for Indiabulls Housing 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.
As you can see, institutional investors have a fair amount of stake in Indiabulls Housing Finance. 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 Indiabulls Housing 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 Indiabulls Housing Finance. Life Insurance Corporation of India, Asset Management Arm is currently the company's largest shareholder with 9.2% of shares outstanding. Inuus Infrastructure Private Limited is the second largest shareholder owning 6.2% of common stock, and Indiabulls Housing Finance Limited., Employees Welfare Trust holds about 5.1% of the company stock. Additionally, the company's CEO Gagan Banga directly holds 0.8% of the total shares outstanding.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
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.
We can report that insiders do own shares in Indiabulls Housing Finance Limited. It has a market capitalization of just ₹59b, and insiders have ₹3.6b 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.
With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Indiabulls Housing Finance. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
We can see that Private Companies own 8.6%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Indiabulls Housing Finance (of which 1 doesn't sit too well with us!) you should know about.
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.
Find out whether Indiabulls Housing Finance is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
Indiabulls Housing Finance Limited, together with its subsidiaries, operates as a housing finance company.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Second-rate dividend payer and slightly overvalued.
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