Positive week for institutional investors at Max Financial Services Limited (NSE:MFSL) who have lost 18% over the past year

To get an idea of ​​who actually controls Max Financial Services Limited (NSE: MFSL), it is important to understand the ownership structure of the company. We can see that institutions hold the lion’s share of the business with 44% ownership. In other words, the group faces the maximum upside potential (or downside risk).

Institutional investors would likely welcome last week’s 3.5% rise in stock prices after a year of 18% losses as a sign that yields should start to rise.

In the table below, we zoom in on the different Max Financial Services ownership groups.

Check out our latest analysis for Max Financial Services

NSEI: distribution of ownership of MFSL on June 13, 2022

What does institutional ownership tell us about Max 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 is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

As you can see, institutional investors hold a sizeable share of Max Financial Services. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Max Financial Services’ historic earnings and revenue below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
NSEI: MFSL Earnings and Revenue Growth June 13, 2022

Max Financial Services is not owned by hedge funds. Our data shows that MS&AD Insurance Group Holdings, Inc. is the largest shareholder with 22% of shares outstanding. Max Ventures Investment Holdings Private Limited is the second largest shareholder holding 15% of the common shares, and ICICI Prudential Asset Management Company Limited owns approximately 4.1% of the company’s shares.

We dug a little deeper and found that 7 of the major shareholders make up about 51% of the register, implying that along with the large shareholders, there are a few smaller shareholders, thereby balancing everyone’s interests somewhat.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Max Financial Services Insider Ownership

The definition of an insider may differ slightly from country to country, but board members still matter. 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 most recent data indicates that insiders hold certain shares of Max Financial Services Limited. It’s a pretty big company, so it’s generally a positive to see a potentially meaningful alignment. In this case, they own around ₹3.3 billion worth of shares (at current prices). If you want to explore the issue of insider alignment, you can click here to see if insiders have been buying or selling.

General public property

With a 14% stake, the general public, consisting mainly of individual investors, has some influence over Max Financial Services. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private Company Ownership

It appears that private companies own 17% of the shares of Max Financial Services. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Ownership of a public company

It appears to us that public companies hold 22% of Max Financial Services. It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. For example, we found 1 warning sign for Max Financial Services which you should be aware of before investing here.

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

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.

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.

Leave a Comment