Buy Tata Motors DVR: Way2Wealth

Way2Wealth has come out with its special coverage on Differential Voting Rights (DVR) with reference to the Tata Motors DVR. The research firm expects the discount to come down to a more respectable level of 30% which has been the average discount over the years.

DVR (Differential Voting Rights) as the name suggests are similar to ordinary equity share (common shares), but it provides fewer voting rights to the shareholder. They are listed and traded in the same manner as ordinary equity shares. However, most DVRs trade at a discount to ordinary shares as they provide fewer voting rights. Companies generally compensate DVR investors with a higher dividend than ordinary shares. International and India Scenario
Many well-known blue chips internationally have raised funds using DVR route. On an average DVR shares trade at a discount of 10-12% to common shares. However, some even trade at a premium. A quick study of some of the international blue-chips companies that have issued DVRs have not given any conclusive evidence. We observe that cases where DVR has a higher proportion in the equity share capital mix are trading at a lower discount. NewsCorp, Viacom and Roche DVRs are such cases of lower discount. While in case of companies where DVR has lesser share in the equity share capital mix mostly trade at a higher discount. However, Volkswagen trades at a premium. In the Indian context, the premium/discount varies widely. Tata Motors is trading at the highest discount amongst the three companies that have issued DVRs. Indian Scenario
In the year 2000, the Government of India allowed the issue of DVR shares by Indian companies. Internationally, DVR is a well-accepted instrument to raise funds. But even after more than a decade of the government

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