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HDFC Securities Research Report
Investing in the stocks of holding companies can be a very efficient and inexpensive way of gaining exposure to the stocks of India's reputable growing business houses.
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It can generate consistent returns with a margin of safety over a long period of time, as well as portfolio diversity. To make it even more lucrative, market cycle or business group-specific corporate events can trigger scenarios with disproportionately greater returns.
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According to evidence from the western world, in evolved markets with diverse shareholdings, like the U.S. and UK, holdco discounts are extremely low (in certain cases holdcos even trade at a premium to underlying asset values).
While Indian holdco stocks are majorly owned by promoters and typically trade at a discount of 30-90%, their global counterparts trade at a lower discount level of 10-25%.
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