Consistent growth in NAV… and Dividend of Rs.24 per share.
2 Likes
@KP1 @kb_snn @nav_1996 - I went through the entire thread. It is a complex structure but a pretty simple business to trace. Wanted to know if you are still invested in it? Also, I checked the website of TICL and could not see anywhere details of their portfolio stocks and latest NAVs…could you pls let me know where can I see all their portfolio companies and latest NAV…Thanks
Yes Invested in TICL .
Pl refer to latest AR … all details are there .
NAV is released Quarterly along with results .
If you want to compute NAV daily , you will have to work on the same through your own spreadsheet .
1 Like
Thanks, I went through the portfolio in details. Got few surprises…I was expecting largest holding to be TCS but incidentally it is Titan, followed closely by Tata Consumer which lead all other stocks by a huge margin. Next comes Trent at almost half the allocation of Tata Consumer, followed by various others at that level like Tata Chemicals & unlisted Tata Industries…TCS comes much down below…
Largest sector is FMCG by huge huge margin!
My main idea for this exercise was to have a close look at the unlisted company holdings specially those of Tata group. Could find Tata Industries, which seem to have a good plan going ahead on making India electronic manufacturing hub. I wanted to see “Tata Digital” but did not find it there. Seems they do not hold any stake in unlisted Tata Digital…pls correct me if wrong.
Also, does any listed Tata firm hold any stake in unlisted Tata Digital? Thanks!
I exited around buy back time when there was sudden bounce.
But always a good company to hold. But I am not a buyer of this or other stocks at these valuations.
2 Likes
Tata digital is most likely owned by tata sons right now. If and when demerger happens of it, then probably tata investment corporation will receive its shares.
Can you elaborate what do you mean by Tata Investment corporation will receive its shares? Either they own it today or they do not own…there is no middle way.
As per their AR report, I could not see any ownership of Tata Digital as on today.
btw Tata Sons own each and every Tata company whose shares are owned by Tata Investment (listed or unlisted) today so I could not understand your demerger logic as well.
Still invested and a long term shareholder. Latest portfolio, as mentioned by others, is available in the AR. Quarterly NAV is announced along with every quarter result. Based on current stock prices, we are likely to end the June qtr at an NAV of around 3000+. Discount to NAV continues to be very wide (65%+) and no sign as yet from the Board that they intend to do something about it.
The stock was suffering from a supply overhang since one large domestic fund (Templeton) was exiting over the past few months. As per May Mutual Fund holdings, this fund has almost entirely exited. This is good for the stock and hopefully, will continue a steady uptrend, given strong fundamentals.
2 Likes
Some takeaways from the AR:
-
Non Tata portfolio continues to be pruned. From 60 odd stocks at end March 31st 2020, they hold about 40 odd stocks - 20 low allocation stocks sold/profits booked.
-
During the year, about Rs 210 cr worth of profits booked on their portfolio. Accounting treatment is via OCI and not via income in P&L.
-
Derivative losses from covered calls at about Rs 11 cr.
-
Their top non Tata holding is now Indusind Bank. They participated in a pref issue by Indusind Bank last year during wave 1 of Covid @ Rs 525 per share for a value of Rs 300 cr. Though the value of their investment has nearly doubled, I can’t say this excites me when there are far better investments in the market.
-
Dividend of Rs 24 is a significant jump from last year’s Rs 18 and based on my assessment of their income for 2021-2022 (dividends, interest etc), this is likely to be maintained or at best increase marginally as Tata group stock pay better dividends going forward thanks to better operating performances.
-
Listed equity portfolio maintains the 80:20 split between Tata and non Tata stocks.
-
Tata stock portfolio has done very well this past year and as of March 31st 2021, contributes 67% of the NAV value v/s 60% as of March 2020. Rest 33% comes from non Tata stocks, debt funds, unlisted stocks at fair value etc.
-
Based on above, clear that non Tata portfolio didn’t do as well in the past year. Increases the case for moving all non Tata holdings into ETF’s. Simple, ensures at least market performance and low cost.
-
Notable unlisted portfolio includes NSE, small shareholding in Tata Capital, 32% in Tata AMC and of course 25% in the plantation business (tea estates via Amalgamated Plantations). Other interesting holdings are Tata Industries, Tata Autocomp and Voltbek Home Appliances.
-
TIC incurs a total cost of Rs 20 cr annually to run a portfolio of Rs 15-16,000 cr. That’s just over 0.1%, beats every single MF and is as cheap as an ETF.
If only management and the Board was proactive, they can bring down the discount to 10-20% of NAV, like it is globally on holding companies. Tata is the flavour of the season and there are many investors looking to add a basket of Tata stocks - TIC fits the bill perfectly for such investors and is available at a 65% discount v/s buying those stocks (Titan, Tata Consumer, Trent, Voltas, Tata Chem, Tisco et al) directly + a 2% dividend yield.
We have to keep engaging with management as well as the Board. Hope shareholders will raise this with the Board at the upcoming AGM.
Top 10 Non Tata holding:
Indusind Bank
HDFC Bank
ICICI Bank
Pidilite
Asian Paints
Infosys
Sun Pharma
Reliance Industries
Nestle
Axis Bank
10 Likes
I have interacted with management in past … Earlier they were even averse of buyback , but in last few years they have been more proactive . They listen to you more , plus they are very active in investor concalls with investee companies .
On discount to NAV I don’t think it will reduce unless we are in 2003-2007 kind of bull market when this share traded near its NAV .
Tata investment also has a very strange “lag” characteristics both in bull and bear market which makes it an excellent Equity as currency candidate …
Agree, they definitely engage with shareholders. I have had the opportunity to interact with Mr. Dalal over the past few years and do appreciate their efforts to lend a patient ear. While their buyback in 2018/2019 at Rs 1000 was a good step, they inadvertently reinforced a message that they are comfortable with an over 30-40% discount (at that time, when the NAV was Rs 1500+). So if the Board itself signalled they are ok with such a discount, how will the market narrow it further? So on every communication I have been re-iterating the need to do another buyback at near NAV prices to change the market’s attitude towards the stock.
On a lighter vein, with 2007 as the example of when TIC when last traded near NAV or possibly even a premium, I’m going to use any major move in TIC towards NAV as an indicator of a market top 
2 Likes
I agree to all your detailed points. Just that a discount of 10-20% is too less a discount considering Indian benchmarks and with TIC having no operating business. HDFC maybe one of the least discount holding company in India but thats because it has a very lucrative operational business as well.
TIC could be a good investment but I think the benefits of directly owning the structural stories Tata companies like those mentioned above are different and in many cases the returns maybe better than holding TIC instead of them directly. TIC investment is unique in that sense with its own benefits and not comparable with direct ownership of underlying top Tata holdings.
Disc: Invested in some of the Tata companies directly hence biased. Interested in TIC but not invested yet. Not a buy/sell recommendation.
Attended the AGM today. Mr Noel Tata was quite clear that he doesn’t think buybacks will help lower the stock price-NAV discount based on their last experience. He, however, did say that the Board will evaluate a stock split, based on many shareholders requesting the same. Mr Tata stated that he couldn’t understand why such a large discount to NAV existed when the international norm is a 20% discount to NAV. He hoped that the continued good performance of the portfolio will help bring down this discount. This I find quite disappointing. The massive discount has existed for the last 10 years and will exist for the next 10, if left to the market. The Board itself seems to be bereft of ideas on how to narrow the discount. As shareholders, we will need to engage with the Independent Directors, whose responsibility it is to look after our interests.
1 Like
What is your return expectation from this stock ??
I am holding this stock from 2013 , I have occasionally added the stocks when discount expanded to 65% and sold when discount in less than 55% My long term realised + unrealised Annualised capital gains is >16% (XIRR) ++ dividend yield on cost of acquisition is 4.2%
I am enclosing the same for your reference
I know like you I used to fight with management in 2015 till 2017 for reduction of discount … But over period of time I realised this discount is very useful in improving effective yield of my stocks and cap gains over holding period is far greater than nifty ETFs
8 Likes
What matters is whether a buyback would create value for shareholders or not, isn’t it? If they can do buybacks at a discount to intrinsic value, they should do it, regardless of whether it reduces the discount to NAV.
Thanks for sharing details about your holding period and strategy.
What are your views on portfolio performance over last few years and going forward?
Do you see them keeping up with indexes? What are the chances of outperforming the index?
Though I am happy with 16%++ return and 4% dividend …
I am presenting ideally what I should have got if NAV discount at same level as it was in 2013 … It should have been around 24% cap gain + 2% dividend
This I believe is buffer for future returns …
1 Like
More than the return, I expect the management and Board to be in tune with shareholder interests. For the promoter, Tata Sons, whether TIC trades at a 20% discount or a 90% discount is immaterial since they own 73% and it’s a part of their holding structure of group companies. For minority shareholders, what matters is that the intrinsic value of the business must reflect in the underlying stock price. Today the discount is 65-70%% and yield is at 2%. Tomorrow, the market may decide to assign an 80% discount to holding companies, what then? For any large investor, especially those in the higher tax bracket, the current yield is not even a consideration since the effective taxation is 40%+. So which investor is going to buy the stock when the Board itself is ok with a sizable discount? So it is incumbent on the Board to take steps to ensure that the underlying fundamentals of the business are reflected in the stock price. When the market fails to do so, buybacks are the best way to ensure it takes place. The move globally into ETF’s is one opportunity that the Board must tap into. ESG focussed funds, dividend yield funds, small cap ETF’s etc, these should be actively courted by the company to ensure passive flows. Sitting back and magically expecting the market to do something it hasn’t done in the past is living in a different world.
I understand your point of view and applaud the returns you’ve managed via actively trading in the stock. I’m a buy and hold long term investor and believe that the Board must take all steps to enhance shareholder value creation.
3 Likes
Absolutely. Buybacks are common in other group companies, especially the likes of TCS which allows Tata Sons access to a lot of funds whenever they need. The problem at TIC is that the interests of the promoter and interests of the minority shareholders are not aligned. Independent Directors on the Board must do what is needed to enhance shareholder wealth creation when the majority investor is happy with status quo.
1 Like
I would like management to focus more on managing portfolio vs managing share price returns … NAV Gr of 20% ++ has been pretty good .
In last few years they have done one buyback , and they are right that it hasn’t impacted the discount to NAV as you can see from table that I shared
Discount is function of market sentiment to holding companies just like it is for any sector of economy … In bull market of 2007/08 … holding companies went into premium over NAV …
As value investor … I want management to do things that is their control and not try to influence market … That is my final take on this subject
2 Likes