MARKET

C MPASS

When 2 + 2 = 3...
Companies at a discount to the sum of their holdings in listed subsidiaries
enerally, the parent company’s market value trade at some discount due to diversification, non-

G should be more than the sum of the market caps

of its subsidiary companies. This is because the
parent company will generally have its own business
synergy, unprofitable standalone operations or
unprofitable operations of an unlisted subsidiary. What
is unusual about the companies mentioned below is that
operations in addition to the subsidiaries. However, there many parent companies trade at a heavy discount.
are some exceptions where the market cap of the parent Since it is the parent company which conducts the
company is significantly less than or close to the sum of business of its subsidiaries, one can’t say that the
the values of the holdings in its subsidiaries. subsdiaries are better managed.
The trading of a parent company at a discount to its The following parent companies, hence, could mean a
subsidiaries isn’t an anomaly per se. The parent can bargain subject to further exploration. WI

Holding or parent company and its market Subsidiary company and its market capitalisation
Holding value of the parent company
capitalisation (Holding of the parent company in per cent)

`3,060 crore
`3,582 crore
`959 crore `828 crore
`2,593 crore Ahmednagar
Amtek India Forgings JMT Auto
Amtek Auto (71.12%)
(64.77%)
(71.73%)

`1,844 crore `621 crore `594 crore

`2,129 crore
`2,623 crore
Kirloskar Brothers Investment `4,065 crore `668 crore
Kirloskar Oil Engines Kirloskar Pneumatic
(55.58%) (54.45%)

`2,259 crore `364 crore

`2,891 crore
`4,667 crore
EID Parry `7,423 crore
Coromandel `36 crore
International Parrys Sugar Industries
(65%)
(62.56%)
`4,644 crore `24 crore

20 Wealth Insight June 2015

S u b s c r i p t i o n c o p y o f D i v y a n s h G u p t a [ g u p t a . d i v y a n s h @ g m a i l . c o m ] . R e d i s t r i b u t i o n p r o h i b i t e d .
 MARKET
C MPASS

`7,460 crore
`8,138 crore
Gujarat Fluorochemicals `9,794 crore `1,648 crore
Inox Wind Inox Leisure
(75%) (48.09%)

`7,346 crore `793 crore

`3,043 crore `277 crore

`12,586 crore `757 crore
Bombay Burmah `1,290 crore
Trading Corporation `24,801 crore Gammon India Gammon Infrastructure
Britannia Industries Projects
(50.75%) (58.67%)

`12,586 crore `757 crore

`682 crore `28 crore

`3,243 crore `37 crore
Kama Holdings `6,207 crore Mawana Sugars `40 crore
SRF Siel Financial Services
(93.56%)
(52.25%)

`3,243 crore `37 crore

`487 crore `1,904 crore

`571 crore `2,227 crore
`487 crore `3,173 crore
PDS Multinational PTC India Financial
Pearl Global Industries Fashions PTC India Services
(100%) (60%)
`487 crore `1,904 crore

`3,486 crore
`6,489 crore
Sundaram-Clayton
`11,305 crore | TVS Motor | (57.40%)

`6,489 crore

June 2015 Wealth Insight 21

S u b s c r i p t i o n c o p y o f D i v y a n s h G u p t a [ g u p t a . d i v y a n s h @ g m a i l . c o m ] . R e d i s t r i b u t i o n p r o h i b i t e d .