Shares of holding companies, including Tata Investment Corporation, Jindal Poly Investment & Finance, Zuari Industries and GFL Ltd, witnessed significant gains, with some rising as much as 20 percent intraday on October 21. This sharp rally comes in a volatile market ahead of the special call auction set on October 28 aimed at price discovery.
The upcoming special auction follows market regulator SEBI's initiative to improve price discovery for Investment Companies (ICs) and Investment Holding Companies (IHCs).
In April, SEBI proposed a framework to address the issue of these companies trading at a significant discount to their book value. By June, SEBI introduced a special call auction mechanism with no price bands for holding companies, targeting firms whose shares trade well below their intrinsic worth.
Holding companies, which typically do not operate businesses themselves, maintain stakes in other companies, primarily within their own group. There are around 70 listed holding companies in India, and these firms often trade at a substantial discount to their holdings' intrinsic value, creating potential for stock price appreciation.
GFL Ltd, a holding company of INOX Leisure Limited and INOX Infrastructure Limited, hit the 20 percent upper circuit limit at Rs 119.34 per share on the NSE. Similarly, Zuari Industries, part of the diversified Adventz Group, surged over 13 percent to an intraday high of Rs 382.10.
Jindal Poly Investment & Finance Co Ltd also recorded a sharp rise of 13.41 percent, touching Rs 884.80 per share on the NSE, while Tata Investment Corporation rose nearly 10 percent to Rs 7,465.10 apiece. Bajaj Holdings And Investment Ltd rose 3.26 percent to its intraday high of Rs 10,297.55 per share on the NSE.
Nalwa Sons Investments Ltd too was locked in 10 percent upper circuit. It is also in the list of companies for special call auction for price discovery.
The upcoming auction, scheduled for October 28, will include companies such as GFL Limited, Kalyani Investment Co Ltd, Pilani Investment & Industries Corporation Ltd, and Nalwa Sons Investment Ltd, among others. Pilani Investment & Industries Corp Ltd and Nalwa Sons were also locked at their respective upper circuit limits during the day’s trade.
Investors are closely watching the developments, with expectations that the SEBI-led reforms and the special auction may unlock value in these holding companies by narrowing the gap between their market price and their book value.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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