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India Equity Strategy - Holdcos For Portfolio Diversification: HDFC Securities

India Equity Strategy - Holdcos For Portfolio Diversification: HDFC Securities

A trader monitors graphs and financial information on the trading inside a stock exchange. (Photographer: Alex Kraus/Bloomberg)
A trader monitors graphs and financial information on the trading inside a stock exchange. (Photographer: Alex Kraus/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

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.

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.

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%.

Click on the attachment to read the full report:

HDFC Securities Holdcos For Portfolio Diversification.pdf

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