Could the ownership structure of Paisalo Digital Limited (NSE: PAISALO) tell us anything useful?

If you want to know who really controls Paisalo Digital Limited (NSE: PAISALO) then you will need to look at the makeup of its share register. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said he enjoys “a business with sustainable competitive advantages that is led by skilled, owner-oriented people.” So it’s nice to see some insider ownership as it can suggest that the management is owner-driven.

Paisalo Digital is not a large company by global standards. It has a market cap of 39 billion yen, which means it wouldn’t get the attention of many institutional investors. In the graph below, we can see that the institutions hold shares in the company. Let’s dig deeper into each type of owner to learn more about Paisalo Digital.

Check out our latest analysis for Paisalo Digital

Distribution of the NSEI property: PAISALO December 3, 2021

What does institutional ownership tell us about Paisalo Digital?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. . We would expect most businesses to have some institutions listed, especially if they are growing.

As you can see, institutional investors have a significant stake in Paisalo Digital. This may indicate that the company has a certain degree of credibility in the investment community. However, it is better not to rely on the so-called validation that accompanies institutional investors. They too are sometimes wrong. When several institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes awry, several parties may compete with each other to sell shares quickly. This risk is higher in a company without a history of growth. You can see Paisalo Digital’s historical revenue and revenue below, but keep in mind that there is always more to tell.

profit and revenue growth
NSEI: PAISALO Earnings and Revenue Growth December 3, 2021

It appears that 9.6% of Paisalo Digital’s shares are controlled by hedge funds. This catches my attention as hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Looking at our data, we can see that the largest shareholder is CEO Sunil Agarwal with 12% of the shares outstanding. The second and third shareholders are SBI Life Insurance Company Limited, Asset Management Arm and Bhavya Electronics & Networks Pvt Ltd, with an equal number of shares in their name at 9.7%.

We also observed that the top 8 shareholders make up more than half of the share register, with a few smaller shareholders to some extent to balance the interests of the larger ones.

While it makes sense to study a company’s institutional ownership data, it also makes sense to study analysts’ sentiments to know which way the wind is blowing. Our information suggests there is no analyst coverage of the stock, so it is likely little known.

Paisalo Digital Insider Property

The definition of an insider may differ slightly from country to country, but board members still count. The management of the company is accountable to the board of directors and the board must represent the interests of the shareholders. Notably, sometimes senior executives themselves sit on the board.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

It appears that insiders own a significant proportion of Paisalo Digital Limited. It has a market cap of just 39 billion yen and insiders have 6.8 billion yen of shares in their own name. We would say this shows alignment with shareholders, but it should be noted that the company is still quite small; some insiders may have founded the company. You can click here to see if these insiders have bought or sold.

General public property

The general public, who are generally individual investors, own 42% of the capital of Paisalo Digital. This size of ownership, while considerable, may not be enough to change company policy if the decision is not aligned with other large shareholders.

Owned by a private company

We can see that the private companies own 15% of the issued shares. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as an individual. While it is difficult to draw general conclusions, it should be noted that this is an additional area of ​​research.

Next steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Paisalo Digital, there are many other factors that we need to take into account. For example, we have identified 2 warning signs for Paisalo Digital (1 is of concern) that you should be aware of.

Sure this might not be the best stock to buy. Therefore, you may want to see our free set of interesting prospects benefiting from a favorable financial situation.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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