5 Indian Companies with Enviable Stock Portfolios

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5 Indian Companies with Enviable Stock Portfolios

Oct 2, 2021

What if I told you that you could invest in 10, 20 or 30 companies by investing in just one?

Sounds too good to be true, isn't it?

No, I'm not talking about mutual funds.

I'm talking about companies that have investments in other companies.

While some of these are holding companies, others are companies that have built a desirable stock portfolio over the last few years.

Here are 5 of them.

#1 HDFC

Housing Development Finance Corporation (HDFC) is an Indian financial services company based in Mumbai, India.

The company is a major housing finance provider but has a presence in other industries as well such as banking, insurance, asset management, and venture capital.

The company has earned itself the reputation of a rock-solid financial institution. Not only in India, but the world over.

HDFC together with its wholly-owned subsidiaries, HDFC Investments and HDFC Holdings holds 21.1% of HDFC Bank.

It also has a 49.9% stake in HDFC Life and a 52.7% stake in HDFC AMC.

The total value of its investments in all three entities stands at Rs 2.9 tn as of 1 October 2021.

HDFC plans to list its unlisted subsidiaries such as HDFC Ergo and HDFC Credila in the coming years. It has also committed to investing Rs 1 bn in technology start-ups every year.

Even if a few of them go on to become credible investments for HDFC, they could yield massive returns for investors.

Shares of the company have rallied 53% in the last year. Its total market capitalization stands at approximately Rs 5 tn.

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#2 Bajaj Holdings & Investments

Next on the list we have Bajaj Holdings.

Bajaj Holdings Investment (BHIL) is a non-banking finance company (NBFC). The company was formed when Bajaj Auto de-merged in 2007.

The manufacturing business was transferred to Bajaj Auto (BAL) while the wind farm and financial services business was vested with Bajaj Finserv (BFS).

All assets and liabilities of erstwhile Bajaj Auto, other than the manufacturing and financial services business, now remain with BHIL.

BHIL holds a 35.7% stake in Bajaj Auto and a 41.6% stake in Bajaj Finserv. Both companies are market leaders in their respective industries.

The total value of its stake in both companies stands at Rs 1.5 tn as of 1 October 2021.

Bajaj Finserv also holds stakes in Bajaj Allianz Life, Bajaj Allianz General Insurance, Bajaj Finance and Bajaj Financial Solutions.

In the past year, the stock of Bajaj Holdings has nearly doubled or jumped 97% compared to a 53% surge in the benchmark index.

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#3 Mahindra & Mahindra

Third on the list is Mahindra & Mahindra.

Mahindra & Mahindra (M&M) is a multinational automobile manufacturing company in India.

The group has a presence across industries such as financial services, hospitality, infrastructure, retail, logistics, and IT.

M&M enjoys a large investment portfolio. The company had 181 subsidiary companies as of 31 March 2021. Some of these are also listed in the stock market.

The stocks in the company's portfolio are -

Name Stake
Mahindra & Mahindra Financial Services 52.3%
Mahindra Holidays and Resorts 67.7%
Mahindra Logistics 58.3%
Tech Mahindra 28.8%
Mahindra CIE Automotive 11.4%
Mahindra Lifespace Developers 50.0%
Swaraj Engines 34.7%
Mahindra EPC Irrigation 54.4%

The market values of these investments are significantly higher than their book value, providing a cushion to M&M's overall financial flexibility.

Mahindra & Mahindra's stake in the above-mentioned companies is worth Rs 607.8 bn as of 1 October 2021.

Of these, Tech Mahindra is riding the digitization trend. The company has been delivering projects in the areas of digital integration and automation to transform it clients' businesses and make them digital ready.

Shares of the company have gone up by 31.5% in the last year. Since its listing in 2006, the stock has risen over 3000%.

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#4 Tata Investment Corporation

Next on the list is Tata Investment Corporation.

The company is an NBFC that invests in a diversified portfolio of companies.

It was started in 1937, under the name The Investment Corporation of India and remained a closely held company until 1959, when it listed on the stock exchange.

Currently, the company is invested in 70 companies.

It invests in Tata and non-Tata companies, though investments in Tata companies constitute a larger portion of company's portfolio

Here are the names of the listed companies that Tata Investments has a stake in -

Tata Teleservices (Maharashtra)
Tata Consultancy Services
Tata Chemicals
Tata Elxsi
Tata Consumer Products
Tata Motors
Tata Power
Tata Steel
The Indian Hotels Company
Titan Company
Trent
Voltas

The total market value of its listed investments stands at Rs 137.4 bn as of 31 March 2021.

The company has achieved a growth of 12% (CAGR) in the last 15 years, compared to 10% (CAGR) of the BSE 200 index. It has grown its investments by 5.5 times during this period.

Shares of Tata Investment are up 62.2% in the last year. In the last five years, the stock is up 121%.

#5 Info Edge

Last on the list is Info Edge.

Info Edge (India) is an Indian pure-play internet company, based in Noida.

The company runs the online job portal naukri.com, matrimony website jeevansathi.com, real estate classifieds platform 99acres.com and educational website shiksha.com.

It also has 28% of its assets invested in various companies, directly or through its wholly-owned subsidiaries.

It holds minority stakes in 19 online companies including Zomato and PolicyBazaar.

Info Edge Investments (As of 31 March 2021)

Info Edge was one of the early investors of Zomato. It sold 3.3% of its stake in the company during the company's IPO via an offer for sale.

It currently holds 15.2% which is worth over Rs 150 bn.

It also holds a 14% stake in PB Fintech which is the parent company of PolicyBazaar.

PolicyBazaar has recently filed its papers with the market regulator and plans to raise Rs 600 bn through its initial public offering (IPO). InfoEdge stands to benefit from this as well.

Why you should invest in companies with stock portfolios...

Companies with large stock portfolios usually trade at a discount. One of the main reasons for this is its diversified portfolio.

As not all subsidiaries of a holding company fare equally well, the poor performers pull down the overall valuation of the holding company.

Such companies are also less volatile

This is because of their high promoter holding and limited liquidity in the market. This also means that they may not see a sustained rally. However, there are exceptions.

While the above reasons make a pressing argument for investing in such companies, like any other investment, one must look beyond the discount.

To exercise caution, investors can bet on holding companies with only limited subsidiaries in their portfolios. They should also take into account the quality of holding companies' management.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Ayesha Shetty

Ayesha Shetty is a financial writer with the StockSelect team at Equitymaster. An engineer by qualification, she uses her analytical skills to decode the latest developments in financial markets. This reflects in her well-researched and insightful articles. When she is not busy separating financial fact from fiction, she can be found reading about new trends in technology and international politics.

Equitymaster requests your view! Post a comment on "5 Indian Companies with Enviable Stock Portfolios". Click here!

2 Responses to "5 Indian Companies with Enviable Stock Portfolios"

HANUMANTHARAO RAVIPATI

Oct 4, 2021

informative.

Like 

Harishkumar Bhagwandas Priyani

Oct 3, 2021

Very insightful Article ... Keep it up. Have 3 of the above mentioned companies in my portfolio based on the same logic. Food for thought for the balance 2 investcos.....

Like (3)
  
Equitymaster requests your view! Post a comment on "5 Indian Companies with Enviable Stock Portfolios". Click here!

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