To get an idea of who actually controls HDFC Life Insurance Company Limited (NSE: HDFCLIFE), it is important to understand the ownership structure of the business. And the group that holds the biggest slice of the pie is made up of 52%-owned state-owned companies. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.
And institutions, on the other hand, have a 30% stake in the company. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones.
Let’s dig deeper into each type of HDFC life insurance owner, starting with the table below.
See our latest analysis for HDFC Life Insurance
What does 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 is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.
We can see that HDFC Life Insurance has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past earnings trajectory of HDFC life insurance (below). Of course, keep in mind that there are other factors to consider as well.
Hedge funds don’t have a lot of shares in HDFC Life Insurance. Housing Development Finance Corporation Limited is currently the largest shareholder, with 48% of the outstanding shares. For context, the second shareholder owns approximately 4.1% of the outstanding shares, followed by a 3.8% ownership by the third shareholder.
To make our study more interesting, we found that the top 2 shareholders hold a majority stake in the company, which means they are powerful enough to influence company decisions.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.
Insider Ownership of HDFC Life Insurance
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Our data suggests that insiders hold less than 1% of HDFC Life Insurance Company Limited in their own name. As this is a large company, we expect insiders to own only a small percentage. But it should be noted that they own ₹4.7 billion worth of shares. It’s good to see board members owning stock, but it can be helpful to check whether those insiders have bought.
General public property
With a 17% stake, the general public, consisting mainly of individual investors, has some influence over HDFC Life Insurance. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.
Ownership of a public company
It appears to us that public companies hold 52% of HDFC Life Insurance. It’s hard to say for sure, but it suggests they have intertwined business interests. This could be a strategic stake, so it’s worth monitoring this space for ownership changes.
It is always useful to think about the different groups that own shares in a company. But to better understand HDFC life insurance, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with HDFC Life Insurance, and understanding them should be part of your investment process.
But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter future.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.