A holding company is a type of business entity that is usually a corporation or a limited liability company (LLC). A holding company typically does not manufacture anything, sell anything, or engage in any other business operations. Rather, holding companies own a majority stake in other companies.
Holding companies offer diversification, control, and financial benefits. Invest in one entity that owns multiple businesses to spread risk, gain influence with a smaller investment, and benefit from centralized functions.
Here are three Multibagger holding companies
Consolidated Finvest & Holdings Ltd
Consolidated Finvest & Holdings Ltd is an RBI-registered non-banking financial company that specializes in investments and lending. It operates as a holding company and provides research, consulting, and software services through its subsidiaries. Its primary business is investing in various financial instruments.
The company has a low price-to-earnings ratio of 3 with zero debt, a return on equity ratio of 50 percent a return on capital employed of 65 percent, and a net profit margin of 76 percent.
The share price of the company rose 132 percent in the last six months and 132 percent in the year to date. For instance, if an investor invested Rs 1 Lakh a year ago the current value of the investment would be 2.32 Lakhs.
On Friday, the share price opened 1 percent up to Rs 334.70 per share from its previous close of Rs 331.4 per share. The small-cap has a market capitalization of Rs 1,060 crores.
According to the company’s financial statements, the operating revenues rose 617 percent from Rs 1.91 crore in Q2FY23 to Rs 13.70 crore in Q2FY24, Additionally, the net profit increased 491 percent from a net loss of Rs 2.54 crore to a net profit of Rs 9.94 crore during the same period.
Ujjivan Financial Services Ltd
Ujjivan Financial Services Ltd is a holding company. It is a major shareholder in Ujjivan Small Finance Bank Limited (USFB), owning 73.68 percent of the bank. The company offers a comprehensive range of financial services and is also a Core Investment Company.
With a good current ratio and a quick ratio of 37.64, the company’s return on equity is 42 percent, its return on capital employed is 10 percent, and its net profit margin is 25 percent.
The share price of the company rose 48 percent in the last six months and 108 percent in the year to date. For instance, if an investor invested Rs 1 Lakh a year ago the current value of the investment would be 2.08 Lakhs.
On Friday the share price opened 0.3 percent up to Rs 572.45 per share from its previous close of Rs 570.55 per share. The small-cap company has a market capitalization of Rs 6,950 crores.
Looking at the financials of the company, their operating revenues rose 43 percent from Rs 1,040 crore in Q2FY23 to Rs 1,496 crore in Q2FY24, Furthermore, net profit decreased 1.9 percent from Rs 315 crore to Rs 309 crore during the same period.
Tata Investment Corporation Ltd
Tata Investment Corporation Limited is a non-banking financial holding company. It invests in a diversified portfolio of securities, including those owned by Tata. It is a subsidiary of Tata Sons Private Limited, the principal investment holding company and promoter of various Tata companies.
The company has a low debt-to-equity ratio of 0.01, a good current ratio and a quick ratio of 3.14, a net profit margin of 90 percent, the stock is trading at 0.91 times book value, and a dividend yield of 2.75 percent.
Over the last six months, the company’s share price has increased by 82 percent, and so far this year, it has increased by 101 percent. For instance, if an investor invested Rs 1 Lakh a year ago the current value of the investment would be 2.1 Lakhs.
With a market valuation of Rs 21,550 crores, the midcap company’s share price opened at Rs 4260.6 per share on Friday, up 0.4 percent from its previous close of Rs 4239.75 per share on Thursday.
Tata Investment Corporation Ltd’s net revenue increased 29.2 percent year on year from Rs 70.38 crores in Q2FY23 to Rs 90.94 crores in Q2FY24. In addition, net profit rose 15 percent year on year, from Rs 107.36 crores in Q2FY23 to Rs 123.51 crores in Q2FY24.
Written by Sriram KV
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