Institutions own 30% of LIC Housing Finance Limited (NSE:LICHSGFIN) shares but public companies control 46% of the company
Simply Wall St · 09/15 04:28

Key Insights

  • Significant control over LIC Housing Finance by public companies implies that the general public has more power to influence management and governance-related decisions
  • 50% of the business is held by the top 2 shareholders
  • 30% of LIC Housing Finance is held by Institutions

A look at the shareholders of LIC Housing Finance Limited (NSE:LICHSGFIN) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are public companies with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutions on the other hand have a 30% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

In the chart below, we zoom in on the different ownership groups of LIC Housing Finance.

Check out our latest analysis for LIC Housing Finance

NSEI:LICHSGFIN Ownership Breakdown September 15th 2023

What Does The Institutional Ownership Tell Us About LIC 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.

LIC Housing Finance already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 LIC Housing Finance's earnings history below. Of course, the future is what really matters.

NSEI:LICHSGFIN Earnings and Revenue Growth September 15th 2023

LIC Housing Finance is not owned by hedge funds. Life Insurance Corporation of India is currently the company's largest shareholder with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.9% and 2.8%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 LIC Housing Finance

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that LIC Housing Finance Limited insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own ₹369k worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 23% stake in the company, and hence can't easily be ignored. 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 46% of LIC Housing Finance 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:

It's always worth thinking about the different groups who own shares in a company. But to understand LIC Housing Finance better, we need to consider many other factors. Take risks for example - LIC Housing Finance has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.