I have another viewpoint on the holding company discount. The holding company can only benefit with the cashflow from the subsidiary via dividends or any business arrangement which they may have (like loans transferred between HDFC ltd & HDFC bank for a consideration).
It is expected that the holding company will never ever sell off their holding in the markets at the market valuations to distribute the proceedings to the shareholders so it’s fair to not consider it at market value in SOTP valuation of holding company. This holding company discount can vary depending on market conditions & company in view. like Bombay Burmah Trading Company (BBTC) holding Brittania, HDFC ltd holding many HDFC group companies, Bajaj holding company holding other Bajaj companies, Tata Sons holding so many tata group companies, so on & so forth.
So we should consider the stakes of LTI, LTTS, L&T fin, etc at a discount while doing a SOTP valuation of L&T.
Hope it helps understand better, Please highlight of there is any gap in my understanding.