Here is a study to compare the market value of listed investments of companies with their own market capitalisations. The objective is to identify stocks where the capitalisation of holding companies may have lagged the increase in value of listed investments. The analysis also ignores factors like holding company discounts, liquidity issues, etc
There could be other issues (liquidity, large debt, operational issues to name a few) which may have led to a company trading at a discount to value of investments – the analysis of which will need much more rigour and is beyond the scope of this piece.
Here is the list of companies where the Book Value of Holding is substantially lower compared to its current market value.
- United Brewery Holding – BV 978 mn while the maket value is 37,642mn
- Bajaj Holdings – BV 11,481mn and market value is 116,814 mn which includes Investments in Bajaj Auto, Finserv, ICIC Bank and Bajaj Hindusthan
- Tata Investment Corp – BV 30,454 mn while market value is 25,318 mn includes holding in Tata Group companies
- Ramco Inds. – BV is 2,823 mn while market value is 6,382 mn includes holding in Madras Cement
- Zuari Industries – BV is 5,440 mn while current value is 8,932 mn includes Holdings in Texmaco, Chambal Fertilizers
- Aditya Birla Nuvo – Investments in Idea Cellular, Hindalco.
One can go through the individual research reports published on these companies which will take into account debt and all other parameters including growth and then take a investment decision only for LONG TERM.
Courtesy: Credit Suisse.