1)
A Thread on Investing in Holding company
Should one consider investing in a holding company?
#holdingcompany
A Thread on Investing in Holding company
Should one consider investing in a holding company?
#holdingcompany
2)what is Holding company?
A Holdco is a type of company which holds a controlling interest in other companies called subsidary companies, which may or may not carry out business operations.
Valuation of holdco is done using sum-of-parts of the investments that the holdco holds
A Holdco is a type of company which holds a controlling interest in other companies called subsidary companies, which may or may not carry out business operations.
Valuation of holdco is done using sum-of-parts of the investments that the holdco holds
3) Types of holdco
4)why to invest in holdco?
- avaiable at discounted value
- relatively cheaper valuations vs underlying investmest
- access to multiple group companies thorugh one co
- more dividends
- if discount narrows,one can except multi-bagger retunrs
- avaiable at discounted value
- relatively cheaper valuations vs underlying investmest
- access to multiple group companies thorugh one co
- more dividends
- if discount narrows,one can except multi-bagger retunrs
5) Why Holdco's trade at a discount ?
- dividend taxes
- Poor capital allocation
- indirect control
- Leakages due to expensse on holdco
- dividend taxes
- Poor capital allocation
- indirect control
- Leakages due to expensse on holdco
6) how much money can be by investing in holdco?
For eg, if holdco is trading at a discount of 90% & if this discount narrows to 80% & the investee company gives a return of 50% ,
Holdco will be valued at 3x its current value, meaning a 3x return in the same period.
For eg, if holdco is trading at a discount of 90% & if this discount narrows to 80% & the investee company gives a return of 50% ,
Holdco will be valued at 3x its current value, meaning a 3x return in the same period.
7)its better to invest in holdco otherthen investing in standalone entity,also we get oppuruntity to invest in group cos indirectly.
here's what Rajeev Thakkar of @PPFAS @RajeevThakkar says about returns in holdco and underlying co
here's what Rajeev Thakkar of @PPFAS @RajeevThakkar says about returns in holdco and underlying co
8) things to consider before investing in holdco
-quality of holdco
-dividend yield
-discount to underlying asset
-prefer big group holdcos like TATA, bajaj etc
-quality of holdco
-dividend yield
-discount to underlying asset
-prefer big group holdcos like TATA, bajaj etc
9) Holding companies in India & its implied discount
10)conclusion
its better to invest in rally good holdco as and when the discount narrows the return could be multi-bagger
end of thread
its better to invest in rally good holdco as and when the discount narrows the return could be multi-bagger
end of thread
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