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Two holding company ideas trading at significant discount to their holding values.


Few points to keep in mind while investing in Holding companies

  • Users need to understand the risk while investing in this type of companies.
  • That is this type of companies are not meant for investing rather they are for exploring/educational purpose only.
  • Despite amazing financials and high book value of the company, it may so happen that over a period company may fail to deliver any meaningful return for the shareholders thereby leaving it as dead investment.
  • Investments in Holding companies should be done with extremely long term view that is of atleast 5 years.

What is a holding company?

It is the company that holds the promoter shareholding in group companies. The stake in group companies may either be a controlling stake or a minority stake but the value of these investments actually becomes the portfolio value of the holding company. Some of the most well-known holding companies are Tata Sons (the holding company for the Tata Group), Bajaj Holdings (the holding company for the Bajaj Group) etc. While Tata Sons is still a closely held holding company, Bajaj Holdings is listed and also traded in the markets.

India has a large number of listed Holding Companies (HoldCos) that hold shares of other listed and unlisted companies. A large part of the value of these Holding Co’s stems from their stakes in other businesses. Globally, Holding Co’ss trade at a discount to the underlying Net Asset Value (NAV) of their holdings. These discounts tend to range between 5-20%. HoldCos in India are unique because the HoldCo discount’s are exceptionally high, ranging from 50-80%. The quantum of the HoldCo discount varies significantly across companies and depends on multiple factors. These factors are not necessarily independent and often impact each other.

Why do Holding companies trade at a discount to their NAV?

  • To begin, holding companies are typically evaluated based on the liquidation worth of their assets. However, this cannot be realised because the holding company rarely sells its assets in the group businesses. As a result, the market worth of such holding companies is theoretical rather than practical.
  • Second, there is the critical issue of capital gains tax, which must be paid if the shares are moved. In any case, this reduces the actual value of the assets.
  • Finally, internal rules prohibit the holding company from realising the worth of its shares, which is reflected in the reduced pricing.
  • Also in many cases promoters are not shareholder friendly, meaning they do not wish to distribute part of their wealth among other shareholders. As a result the share price would be get stuck in a narrow range which would lead to the entire investment being dead investment.

Our past track record on Holding companies

*Some companies may have fallen significantly after delivering significant returns.

In past we have suggested companies which are up significantly since suggested price such as Stel holdings, Tata Investment corp, Bajaj Holdings & Investments 3-4 times, Haryana capfin, Riddhi Siddhi Gluco, Andrew Yule, Elpro International and Recently suggested Vardhman Holdings among many others.

This week’s Idea

BF Investments

BF Investment Ltd. (BFIL) is a part of the Pune-based Kalyani Group. The Kalyani Group, founded in the mid-1960s, is an Indian global corporation with sophisticated technology, engineering, and production capabilities in sectors such as Engineering Steel, Automotive, Industrial, Renewable Energy, Urban Infrastructure, and Specialty Chemicals. The group is the worldwide market leader in forging and India’s biggest producer of forging. Bharat Forge, KCTI, Kalyani Technoforge, Kalyani Global, Automobile Axles, and others are among the Group Companies.

The Company’s primary activities are investments, and the majority of the Company’s investments are strategic investments in Kalyani Group Companies. The investments were made with the intention of holding for the long run and are not kept for trading.

As of March 2022, the company’s assets totalled more than Rs. 3000 Cr. Kalyani Steels Ltd., KSL Holdings Private Ltd., Triumphant Special Metals Pvt. Ltd., Kalyani Financial Services Ltd., Nandi Engineering Ltd., Synise Technologies Ltd., Automobile Axles Ltd., and Meritor (HVS) India Ltd. are all subsidiaries of the company.

Kalyani Investments

The Kalyani Company includes Kalyani Holdings Co. Ltd. The Company is a Core Investment Company, with more than 60% of its net assets invested in equity shares of Group Companies and more than 90% of its net assets invested in equity/preference shares of or debentures/debts in Group Companies.

Kalyani Investment Co. was created by demerging Kalyani Steel Ltd.’s ‘investment business’ and combining the ‘Investment Undertaking’ of three wholly-owned companies of Kalyani Steel Ltd. (Chakrapani Investments & Trades Ltd., Surajmukhi Investment & Finance Ltd., and Gladiolla Investments Ltd.).

More information about group as well as group companies.

Please note that below mentioned companies are those where holding companies Kalyani Investments and BF investments have significant presence in. All of the below mentioned companies are not Darkhorsestock ideas.

Kalyani Group

The Kalyani Group is an Indian global conglomerate with main interests in four industries: engineering steel, automotive and non-automotive components, renewable energy and infrastructure, and specialty chemicals. It has also achieved advances in defence production, as seen at DefExpo 2020.

It has collaborative partnerships with Alstom, Carpenter Technology Corporation, Iochpe-Maxion, Meritor, Sharp Corporation, and Rafael Advanced Defense Systems, among others.

Nilkanth Rao Kalyani established the Kalyani Company. Bharat Foundry, the group’s first business, was founded on June 19, 1961.

The group is presently headed by Nilkanthrao’s son, Baba Kalyani. Baba Kalyani had been awarded Padma Bhushan in 2008 for contributions to Trade and Industry.

Bharat Forge

Bharat Forge (BFL) is India’s leading automobile component exporter, with powerful engineering and technical forging and metallurgy capabilities. With a total capacity of 6.83 lakh MT per year, its goods are used in local and foreign markets such as PV, CV, oil & gas, building & mining, electricity, defence, and so on. Besides company also has forayed into defence sector.


Hikal works with businesses in the pharmaceutical, crop protection, and specialty chemicals industries. The company provides research services, active substances, and intermediates to its clients. Leading multinational companies in the crop protection and pharmaceutical industries have examined and authorised Hikal’s manufacturing sites.

Automotive Axles

Automobile Axles was founded in 1981 as a joint venture between the Kalyani Group (35.5% ownership) and Meritor Inc, USA (35.5% ownership). The Company is in the business of making and providing Automotive Parts to key local and worldwide truck and bus makers (LCV, MCV, HCV, Military & Off-highway Vehicle Segment).

The company is India’s biggest autonomous axle maker and second-largest brake builder. Ashok Leyland, Daimler India, Mahindra & Mahindra, Tata Motors, Volvo Eicher, and many other businesses are among the company’s customers. In FY21, Ashok Leyland made for 57% of the company’s sales, up from 52% in FY20.


Although both BF Investments and Kalyani Investments have significant value in their own way, this does not imply that their share prices will approach their assessed book value. That is because, as previously stated, it is entirely up to management to generate wealth for themselves and their shareholders. Promoters are mostly cautious, which means they don’t want to boast like other groups by increasing income multiples. As a result, there is a good possibility that the company will be range bound and will not reach its maximum potential.

If the company does not move at all, those looking to make fast money may find themselves stuck with their investments, and there is always the chance that this will turn out to be a dead investment. Therefore it is advised to be cautious while exploring holding companies.

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