Tata Investment Corporation: Unusual discount to NAV

I am on the other side of the spectrum. I bought TICL a little over a year ago and sitting on ~5x return whereas my return expectation was 17-20% (HoldCo Return = Underlying Portfolio Return + Dividend Yield ± HoldCo Discount). So fundamentally I got 9/10 year returns in a year.

I think I got lucky and due to some bad luck. Now when that bad luck strikes is anyone’s guess.

Although there are a few triggers which market participants are giving certain weightage (less or more, time will tell):

  1. Upcoming NSE IPO (date is not announced yet)
  2. Upcoming TATA capital IPO (expected date is in 2025)
  3. Upcoming TATA Sons IPO (date is not announced yet)

Maybe a few more unexpected +ve triggers on the upside perhaps. maybe!

My current rationale from the portfolio level is to trim the position (soon) from purely reducing concentration risk. However, I think it’s prudent to hold since there’s nothing that fundamentally has changed i.e. it’s still an optimal way to index the TATA group of companies (my primary thesis) which still pays around 80% of earnings as dividends (a bird in the hand is worth two in the bush).

But definitely, CMP is over the top and due for some correction (as I mentioned I am due for some bad luck anytime).

Please correct me if I made any wrong assumptions above. Happy to learn and course correct.

Disc : Invested from early 2023 levels (position size here). No transactions in the last 30 days.

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