Punjab National Bank (NSE:PNB) share price fell 14% last week; the state or the government would not be happy

To get an idea of ​​who really controls the Punjab National Bank (NSE:PNB), it is important to understand the ownership structure of the company. The group with the largest number of shares in the company, around 73% to be precise, is the state or the government. In other words, the group faces the maximum upside potential (or downside risk).

As the market capitalization fell to ₹383 billion last week, the state or government would have suffered the highest losses than any other shareholder group in the company.

In the table below, we zoom in on the different ownership groups of the Punjab National Bank.

If you are not interested in researching the ownership structure of PNB, we have a free list of interesting investment ideas to potentially inspire your next investment!

NSEI: Breakdown of ownership of PNB as of September 30, 2022

What does institutional ownership tell us about the Punjab National Bank?

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 own a sizeable share of the Punjab National Bank. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be 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 Punjab National Bank’s historical earnings and revenue below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
NSEI: PNB Earnings and Revenue Growth as of September 30, 2022

We note that hedge funds have no significant investment in the Punjab National Bank. The company’s largest shareholder is India, with a 73% stake. This essentially means that they have considerable influence, if not absolute control, over the future of the company. With respectively 8.3% and 1.0% of the outstanding shares, Life Insurance Corporation of India, Asset Management Arm and Société Générale Group, Banking Investments are the second and third largest shareholders.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.

National Bank of Punjab 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.

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.

Our most recent data indicates that insiders own less than 1% of the Punjab National Bank. Keep in mind this is a big company and insiders hold ₹4.6 million worth of shares. The absolute value can be more important than the proportional part. It’s always good to see at least some insider ownership, but it might be worth checking to see if those insiders have sold.

General public property

The general public, who are usually individual investors, hold a 14% stake in the Punjab National Bank. While that size of ownership might not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand the Punjab National Bank, we need to consider many other factors. For example, we found 1 warning sign for National Bank of Punjab which you should be aware of before investing here.

Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of interesting companies.

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 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.

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Karen J. Nelson