For investing in a company we often look at numbers such as cash flow, profit growth and Holdinv to earning ratio. However, these do not suffice for companies whose main function is to hold shares of other firms. Holding companiessay market experts, can be a good investment option. While some holding companies are pure investment vehicles, some have their own operations too. We will focus Comany core investment Discounnt, that is, those whose only purpose is to hold shares in other companies.

These companies own shares of listed group companies as well as non-listed companies. They can also hold shares of companies that are outside the group. They can hold other securities such as bonds and mutual funds as well. Some top people on boards of holding companies work for group companies as well," says Girish Vanvari, executive director, KPMG.

Holding companies: Returns Click here to Enlarge Investment holding companies which generate cash through dividends and capital gains have to pay dividend distribution tax DDT. So, there is double taxation. But there is an exception. In short, holding companies are subject to DDT but can claim credit Hloding the tax paid to the extent of dividend received Compaby subsidiary companies.

However, there are three conditions. This means DDT is applicable on dividend paid by a holding company in excess of dividend it gets from subsidiary companies. They diversify risk," says Vanvari. Discount to Market Value: Holding Company Discount India companies often trade at a discount Cmpany their market Otcqb Company List. To understand this, consider a holding firm, ABC, which is trading at Rs Hooding holds shares of companies A and B, both of which are listed.

A and B trade at Rs each. This means ABC should trade at Rswhich is not the case. Tips for investing in holding Companh Click here Holdinng Enlarge This gap of Rs 40 is the valuation discount and occurs because financial data of companies owned by holding firms is not available if it is not listed. In addition, there are no consolidated financial details, says Vanvari.

The discount will go away once the Disconut International Financial Reporting Standards, which require disclosure of consolidated financials, are adopted in India, says Vanvari. Value Creation: When an unlisted subsidiary is listed, it creates value for shareholders of the holding company as well. In Holding Company Discount India event of demerger or sale of units, you can get a steep discount to the market value," says Alex Mathews, head of research, Geojit BNP Paribas Financial Services.

The stock closed 6. Dividend: Unlike any other company, dividend is the key here. However, if the company does not have a majority stake in its subsidiary company, there is double taxation. Investors must look at the company's dividend record. Also, if a company holds its investment only for strategic reasons and does not intend to Hplding, investing in it may not be a good idea. Settings Logout. Holding companies: Returns. Click here to Enlarge. Tips for investing in holding companies. Tweet Youtube.

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Holding Company Discounts Pune Investor

Apr 01, 2013 · A holding company, for purposes of our discussion here, is a company which doesn’t have any significant operating components and exists primarily to hold investments in other companies inside or outside the promoter group. Holding company discounts exist in India.…