Holding companies index outperformed the benchmark index over a longer investment horizon, according to a report by brokerage firm Way2Wealth. Returns of the eight holding companies covered by the study were at 95 per cent, 26 per cent and 27 per cent over a one-year return, five-year CAGR, and 10-year CAGR, respectively. This outpaced the returns of Nifty 50 index and Sensex at 27/23 per cent, 14 per cent and 13 per cent during the respective period.
JSW Holdings, Kalyani Investments, Summit Securities, Pilani Investment, Ramco Industries, Bengal & Assam Co, Bajaj Holdings, and Tata Investment Corp are the companies covered by the report. The brokerage recommended ‘buy’ for these holding companies with a potential upside of over 50 per cent in the next 2-3 years.
Tata Investment Corp is the star performer among them, with 217 per cent return in a one-year period and 52 per cent in a five-year period. However, over 10 years, its performance is comparable with the others at 31 per cent CAGR. The NBFC has invested in companies such as Tata Chemicals, Tata Consumer Products, Trent, Tata Elxsi, Tata Steel and Tata Motors.
However, Bengal & Assam Co. (holding investments in JK Group companies) has 38 per cent CAGR in ten years, 124 per cent return in one year, and 37 per cent CAGR in five years.
Kalyani Investment has provided 122 per cent return in a year, and 17 per cent and 19 per cent CAGR in five-year and 10-year periods, respectively. The holding company, a part of Kalyani Group, was formed by demerging the investment business of Kalyani Steels.
JSW Holdings, an NBFC that forms the investment arm of JSW Group, provided 67 per cent return in one year, 18 per cent CAGR in five years, and 27 per cent in 10 years.
Summit Securities, the RBI-registered NBFC arm of RPG Group, has provided 100 per cent returns in one year, and 14 per cent CAGR and 22 per cent CAGR in five-year and 10-year period, respectively. It has invested in varied sectors, including companies such as CEAT, KEC International and Zensar Technologies.
Pilani Investments & Industries Corporation has provided 101 per cent return in one year and 14 per cent CAGR in five years. Its major investments include Grasim, Ultratech Cement, Hindalco and Century Textiles. The Way2Health report stated that the long-term outlook of these companies is positive.
Ramco Industries, which has large investments in Ramco Cements and Ramco Systems, has provided 71 per cent returns in one year, 2 per cent CAGR in five years, and 19 per cent CAGR in 10 years.
Bajaj Holdings & Investment, which came into existence in 2007 following a demerger, has provided 23 per cent return in one year, 19 per cent CAGR in five years, and 22 per cent CAGR in 10 years.