HomeMarketsHolding company stocks rally up to 20%. Here’s why

Holding company stocks rally up to 20%. Here’s why

Shares of holding companies like Bombay Burmah, Tata Investments, JSW Holdings and TVS Holdings rallied up to 20% on BSE on Monday as the Securities and Exchange Board of India (Sebi) introduced special call auctions with no price bands for price discovery of investment holding companies.

Stocks of Maharashtra Scooters, Pilani Investment and Industries, Kama Holdings, Kalyani Investments, BF Investment, Nalwa Sons, Summit Securities and Vardhman Holdings also surged on Monday.

Meanwhile, shares of Bajaj Holdings, Tata Investments, Bengal Assam, Balmer Lawrie, Sentinel Tea and Exports (STEL) and TVS Holdings rose between 2-6.5% in the day.

On Thursday, the market regulator issued a framework for the price discovery of holding companies. It announced that the first special call auction will be conducted in October by stock exchanges, based on the latest available audited financial statements of these companies. Subsequent special call auctions will be held as and when the companies publish their annual audited financial statements.

“Currently, retail investors are often unaware that certain companies hold substantial investments in listed entities, making them hidden gems. This initiative will facilitate price discovery for these companies,” said Sunil Damania, chief investment officer, MojoPMS to ET.Also read: Sebi modifies duration for call auction in pre-open session for IPOsAs per Sebi’s framework, holding companies will be identified based on uniform industry classifications provided by stock exchanges. The criteria are that the stock should have been listed for at least one year, it should not be under suspension for trading, and the total assets of the company invested in stocks of other listed companies should be less than 50%, among other requirementsThe stock exchanges will initiate the process with a 14-day advance notice to the market.

Kalyani Investment holds a 31.36% stake in Hikal, 13.6% in Bharat Forge and 16.45% in BF Utilities while The Bombay Burmah Trading Corp has a 17% stake in Bombay Dyeing and a 50.55% stake in Britannia Industries.

Pilani Investment, an investment arm for the Birla group companies, holds stake in companies like Grasim, Hindalco, UltraTech Cement, and Century Textiles worth Rs 22,580 crore while its market cap is Rs 4,433 crore.

Frontline holding companies have enough participation and interest on the exchange for price discovery. For less liquid holding companies, the call auction method could help.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Content Source: economictimes.indiatimes.com

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