A note on where ownership is moving, and what it means if you run a listed company
outside the top 250.
Ten years ago, the investor a listed Indian company most wanted to reach sat in
Singapore, Hong Kong or London. Foreign portfolio investors held 25.7% of Indian
equities in March 2015. They set the tone, they moved the price, and an IR programme
that couldn't reach them wasn't really an IR programme.
That has quietly stopped being true. FPI ownership fell to 19.1% by December 2024
and stood at 15.1% in August 2026 — roughly ten percentage points shed in a decade.
Over the same period domestic institutional ownership climbed to 19.5%, and has now
sat ahead of foreign ownership for seven consecutive quarters.
For companies in the Nifty 50, this is an interesting statistic and not much more.
They are covered, owned and priced either way. For the roughly 2,617 companies that
sit outside SEBI's top 250, it changes who you should be talking to, and how.
What actually changed
The buyer is reachable now.
A domestic fund manager is a train ride away, not a roadshow. They can visit the
plant. The practical barrier to institutional engagement has collapsed for companies
that previously assumed institutional investors were out of reach.
But the buyer is also busier.
A domestic mid-cap fund may screen several hundred companies and hold forty. The
scarce resource has shifted from access to attention. Being reachable is not the
same as being found.
And the buyer is being handed money whether
or not they have found you.
SIP flows arrive monthly regardless of market conditions. That money has to be
deployed, which means the discovery problem is, right now, unusually solvable —
if a company is legible enough to be discovered.
The legibility problem
Sell-side coverage is a function of brokerage economics, not company quality. An
analyst covers what generates commission, and commission follows liquidity. A company
with thin institutional ownership has thin liquidity, which means no coverage, which
means institutions don't find it, which keeps ownership thin. It is a closed loop,
and companies sit inside it for years.
What breaks it is rarely a better quarter. It is usually a company becoming legible —
producing a consistent, comparable, forecastable account of itself that an analyst can
build a model from without three rounds of clarifying emails. That sounds like a
communications problem. It is closer to a data-discipline problem.
What the evidence supports — and what it doesn't
Peer-reviewed research across US- and UK-listed companies consistently finds that firms
which invest in professional IR see statistically significant increases in analyst
coverage, institutional ownership and valuation multiples, alongside lower stock
volatility and faster price discovery, relative to matched companies without it.
What that literature does not establish is a reliable magnitude for any
individual company. Anyone who tells you IR will re-rate your stock by a specific
number is selling something. The mechanism is well documented. The size of the prize
is not.
Three questions worth asking internally
A diagnostic any CFO can run without external help.
-
1
How many analysts cover us, and how many cover our three closest peers? If the
gap is wide and the businesses are comparable, that gap is not about fundamentals.
-
2
What proportion of our register is domestic institutional, and which way has it
moved over eight quarters? Flat or falling, while flows compound at 16.5% a year,
is a signal worth understanding.
-
3
When did we last speak to an institution that doesn't already own us? For a
surprising number of companies outside the top 250, the honest answer is never.
The ownership base of the Indian market has shifted decisively toward domestic
institutions, and those institutions have more money to deploy each month than the
listed universe is currently giving them reasons to deploy it into. Most companies in
this segment are still communicating as though nobody is listening. For the first time
in a while, that assumption is wrong.
Sources: Kirk & Vincent (2014), The Accounting Review 89(4);
Chapman, Miller & White (2019), The Accounting Review 94(2);
Agarwal, Taffler, Bellotti & Nash (2016), Accounting and Business Research 46(1).
Ownership and flow figures: Business Standard analysis of exchange and depository
ownership data, 2015–2026. Listed company counts: SEBI market-capitalisation
classification applied to NSE-listed companies, December 2025.
Swati Chauhan · Vaydha