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This Tata group stock doubled investors money in just six months

This Tata group stock doubled investors money in just six months
  • Share price of Tata Investment Corporation is surging because of its dividend income, interest and profit on sale of investments.
  • The company aims to invest in sector leaders that have potential to remain value accretive over the medium and long term.
  • Besides other stocks, the company has invested huge corpus in all Tata company stocks.
Shares of Tata Investment Corporation have been rallying this year so much that it doubled in the last six months. The stock has surged 98% during the period.

Tata Investment Corporation is a non-banking financial company (NBFC) involved in making long-term investments. Shares of the company are surging because it is witnessing a boost in its income through dividend, interest and profit on sale of investments. It is registered with the RBI under the category of investment company.
Tata Investment Corporation

% change in share price

Last five days

46%

One month

82%

Six months

98%


The company invests in a diversified portfolio of listed and unlisted equity shares, debt instruments, mutual funds including Tata companies. Its primary sources of income consist of dividend, interest and gains on sale of long term investments.

“Tata Investment Corporation has shown a massive rally on its robust revenue from the higher dividend income, interest and profit on sale of investments. The company has well exploited the opportunities to invest in companies which have consistent growth prospects with high quality earnings. Its business strategy to invest for the long term to realize gains to augment the operating income for dividend distribution has boosted the investors’ confidence in the company,” said Dr Ravi Singh, vice president and head of Research at Share India.

The Tata firm reported about 66% growth in consolidated net profit at ₹89 crore, driven by higher dividend income.
Particulars

Dividend income

Profit after tax

Q1 FY23

₹74.19 crore

₹89.74 crore

Q1 FY22

₹41.26 crore

₹53.89 crore


Catch up rally in holding companies that typically trade at discount
Shares of holding companies like Bajaj Holdings and Investment, Aditya Birla Capital, L&T Finance Holdings have been doing well recently.

Analysts say this is because investors are being cautious amid volatile market situations and investing in well known group companies that offer attractive holding company discounts.

“All the group companies of Tata Group companies have been doing extremely good if stock performance is concerned. But if you observe the rally in Tata Investment started from the past three to four months and last fortnight the stock has been hitting circuits. So there is a catchup rally that is witnessed in Tata Investment Corp in comparison to other Tata Group companies. Since it is a holding company, holco company discounts are available,” Kranthi Bathini, director of equity strategy at WealthMills Securities said.

Analysts say that whenever there is a heightened activity in the market, these holding companies tend to move higher because they are available at discounted price. “Shares of other group holding companies have also seen catch up rallies,” said Baithini.


Tata Investment Corporation aims to invest in sector leaders
In the future, Tata Investment Corporation aims to invest in sector leaders that have potential to remain value accretive over the medium and long term. “Management will evaluate and select investments based on high quality governance, long term sustainability and strength of the investee company’s balance sheets,” the company said in its FY22 annual report.

Besides other stocks, the company has invested huge corpus in all Tata company stocks. So basically, with an exposure to Tata Investment Corporation’s stock, one can have exposure to many other Tata Group companies and other unlisted companies as well. The market capitalisation of the company stood at ₹13,984 crore as of September 2022.

It’s also looking to invest in new age companies. “Your Company will continue to look for opportunities to invest in companies which have consistent growth prospects with high quality earnings. In new age companies where valuations are a concern and whose earnings will fructify at a later stage in their development, the Company has made a small allocation of capital,” the company said in its annual report.

Here is the sector-wise investment distribution
Distribution among different industries of securities as a percentage to the book value

As on March 31, 2022

As on March 31, 2021

Automobiles & auto components

6.69%

6.36%

Banks

12.32%

15.84%

Cement

2.47%

2.95%

Chemicals & fertilizers

1.44%

1.72%

Engineering, construction & infrastructure

2.21%

1.39%

FMCG & consumer durables

10.28%

6.61%

Financial services & insurance & AMC

15.05%

11.32%

Healthcare

1.85%

1.03%

Hotels & QSR

4.75%

5.22%

IT

3.47%

3.37%

Internet & software services

0.99%


Metals & mining

3.47%

4.15%

Oil and natural resources

4.23%

1.56%

Power generation & transmission

0.24%

0.29%

Real estate

0.25%

0.74%

Retail

3.44%

4.12%

Telecommunications

0.73%

0.86%

Transportation and logistics

0.91%

1.48%

Debentures/bonds

13.10%

17.97%

Mutual funds/VCs.InvITs

12.11%

13.02%

$TATAINVEST.NSE Completely Bullish on this stock as BIG ELEPHANT BARS WITH Volume are clearly visibile but as investors and Traders we need to get a better price to enter into the Stock to make the best use of it. So, any price near 2400 will be a GOOD BUY!

— (@Tradingmonks) September 21, 2022]]>

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