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DARKHORSESTOCKS

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-- acquiring more that you are paying for.

You must value the business in order to

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-- CHARLIE

MUNGER

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TATA INVESTMENT CORPORATION LIMITED

CURRENT MARKET PRICE -: 1027 BOOK VALUE / SHARE - 4800 Rs

MARKET CAPITALISATION -: Rs 5,237 crores

VALUE OF INVESTMENTS -: Rs + 23600 crores (approx)

Tata Investment is completely debt-free, with 68.51% of the company being owned by Tata Sons. The Company’s activities comprises primarily of investing in long term investments in equity shares, debt instruments, listed and unlisted, and equity related securities of companies in a wide range of industries. The major sources of income of the Company consist of dividend, interest and profit on sale of investments.

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ABOUT TATA INVESTMENT CORPORATION

Established in 1937 under the name The Investment Corporation of India Limited, Tata Investment Corporation Limited was promoted by Tata Sons Ltd. The Company remained a closely held company till 1959, when it became one of the few publicly held investment companies listed on the Stock Exchange, Mumbai. During the 1960s and 1970s the

Company’s activities underwent a gradual transformation from assisting in the

establishment of new ventures, to acting as an investment company with a diversified portfolio of investments.

The original inspiration for launching Tata Investment Corporation Limited was to help set up and nurture small and medium-sized entrepreneurs and their companies. For many years after its inception, the Company played a role of a catalyst in promoting long term investments in the country and was instrumental in the promotion of projects with new Indian entrepreneurs and foreign collaborators whilst simultaneously taking

minority equity stakes in such new projects. This promotional role of TICL resulted in the formation of many companies which were well known a few decades ago such as,

Associated Bearing Co Ltd. (now SKF Bearings (India) Ltd.), Ceat Tyres Ltd. (now Ceat Ltd), National Rayon Corporation, companies promoted by the Ghia family and others, some of which are even today listed on the stock exchange.

In the earlier years, TICL also had a subsidiary company by the name of Investor Machine Tools Ltd. whose plant located near Pune was subsequently taken over by Tata Motors Ltd. (which was then known as Telco) for building up the machine tools division.

Apart from growing its own investment activities, TICL also expanded inorganically by merging the investment activities of Investa Ltd. and Varuna Investments Ltd. with itself. TICL has an exemplary dividend record having declared dividend every year since

inception, barring the first year.

The Company became a subsidiary of Tata Sons Ltd. in February, 2008. Tata Sons,

together with other Tata companies, holds approximately 73.38% of the paid-up capital of Tata Investment Corporation Limited. as on 31st March, 2019.

TICL has been rated by CRISIL since 1994, and has been assigned their highest rating of ‘AAA’ (pronounced triple A) representing highest safety in payment of interest and principal amount, which rating has been re-affirmed from year to year and is valid to date.

TICL has acquired 95.57% stake in Simto Investment Co. Ltd. (Simto) on 31st August, 2012, following which Simto has become a subsidiary of TICL

TICL jointly with Tata Sons were among the first companies to receive an in-principle approval to incorporate, and become the sponsors of the Tata Mutual Fund.

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TATA ASSET MANAGEMENT COMPANY

Tata Asset Management Company (TAM), established in 1994, is among the oldest asset management companies in the country.

The company manages funds across the entire risk-return continuum. These include equity funds, hybrid funds, and fixed income funds. The diversity of the fund offerings enables investors to invest as per their life stage, financial goals and risk profile catering successfully to their long-term investment needs.

The Company (TICL) holds 32.09% of the equity share capital of Tata Asset Management Ltd. The consolidated turnover of the company during the year was Rs 216.55 crores and Profit after tax for the year was Rs 22.25 crores. The company has a net worth of Rs 272.78 crores as on 31st March 2020. As of June, 2020, the company had more than Rs 51,000 crore in assets under management.

BuyBack

In 2018 The board of directors of the company had approved the buyback of the shares amounting to 8.17% of the total paid-up equity share capital at Rs 1,000 per equity share which amounted to around Rs 450 crores.

Financials

For qtr Ending DEC 2020

• Net Sales at Rs 27.00 crore in December 2020 up 9.8%.

• Quarterly Net Profit at Rs. 27.53 crore in December 2020 up 73.69%. • EBITDA stands at Rs. 22.21 crore in December 2020 up 11.55%.

• Tata Inv Corp EPS has increased to Rs. 5.44 in December 2020.

March 2020

• The profit from the sale of long-term equity investments (post tax) for the year ended 31st March, 2020 is Rs 126.55 crores.

• The standalone profit before tax for the year under review is Rs129.21 crores. • The profit after tax for the year under review stands at Rs 118.64 crores. • The Consolidated profit after tax for the year amounted to Rs 90.09 crores.

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Holding Company

What exactly do we understand by the concept of a holding company?

It is the company that holds the promoter shareholding in group companies. The stake in group companies may either be a controlling stake or a minority stake but the value of these investments actually becomes the portfolio value of the holding company. Some of the most well-known holding companies are Tata Sons (the holding company for the Tata Group) and Bajaj Holdings (the holding company for the Bajaj Group). While Tata Sons is still a closely held holding company, Bajaj Holdings is listed and also traded in the

markets.

India has a large number of listed Holding Companies (HoldCos) that hold shares of other listed and unlisted companies. A large part of the value of these HoldCos stems from their stakes in other businesses. Globally, HoldCos trade at a discount to the underlying Net Asset Value (NAV) of their holdings. These discounts tend to range between 5-20%. HoldCos in India are unique because the HoldCo discount is sometimes exceptionally high, ranging from 50-80%. The quantum of the HoldCo discount varies significantly across companies and depends on multiple factors. These factors are not necessarily independent and often impact each other.

Why do Holding companies trade at a discount to their NAV?

• Firstly, the holding companies are normally valued based on the liquidation value of the investments. But that is something that cannot be realised as the holding company will rarely sell of their investments in the group companies. Hence the market value for such holding companies is more theoretical than practical.

• Secondly, there is the all important aspect of capital gains tax that has to be paid if the shares are transferred. This will anyways reduce the effective value of the investments. • Lastly, internal policies will prevent the holding company from realising the value of

shares and that is also factored into the discounted pricing.

Valuation

The total Investments of Tata Investment Corporation stands at around Rs 23600 crore (As of Latest Valuation report attached at the end). Additionally TICL has around 32% stake in TATA AMC which being an unlisted company is very difficult to value. Now as said Abe holding company trade In between 5-20% discount to their NET ASSET VALUE (NAV). Therefore being prudent and considering 20% discount to its holdings the value comes at around Rs 18800 crores. Now since we have taken the value of equity investments as of latest date and assuming there may be more downside in the coming period lets further expect 20% fall in the market value of those investments which gives us the NEW ASSET VALUE (NAV) Rs 15104 crores.

TICL has 5,05,95,296 no of fully paid up equity shares. Therefore dividing the NAV by Total number of fully paid equity shares gives us the value of TICL’s total investments per share approx around 3000 Rs which is the most prudent estimate.

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Rationale

Although TICL does possess huge value in itself but it would not mean that the share price of the company may hit the estimated price of 2990 Rs. That is because as discussed earlier it all comes to the management how they wish to create value for themselves and the shareholders. Tata Group is considered as among one of the most transparent , sound and ethical groups in India . However the TATA Group is also very conservative that is to say they don’t wish to show off like other groups by boosting

earning multiples. So chances are the stock may be even range bound and may fail to live upto its full potential. Therefore we are requesting users to not put us unnecessary

queries regarding the Target Price of the stock. Target Price or Fair value has been provided just for the understanding of the users.

(Note-: Values of the investments in the companies have been taken considering the holdings as presented in March 2020 balance sheet of which TCIL may have sold some or complete holdings in some companies or could also have take new investments in other companies.)

Particulars AMOUNT

TOTAL VALUE OF INVESTMENTS (Cr.) 23600

Less: DISCOUNT (Holding Company) 20% (4720)

GROSS VALUE (Cr.) 18880

Less: VOLATILITY DISCOUNT 20% (3776)

NET VALUE (Cr.) 15104

NO OF FULLY PAID EQUITY SHARES (Cr.) 5.05

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1 3 4 5 6 BANKS

COMPANY SHARES HELD VALUE (Cr) CMP SECTOR Axis Bank Ltd 1783000 131.942 740 BANKS HDFC Bank Ltd(Previous Year Face Value ₹ 2) 1830000 265.35 1450 BANKS ICICI Bank Ltd 2557500 115.0875 450 BANKS South Indian Bank Ltd 6273432 52.70 84 BANKS State Bank of India 855000 34.2 400 BANKS

Total 599.276

CEMENT

COMPANY SHARES HELD VALUE (Cr) CMP SECTOR

ACC Ltd 340000 63.274 1861 CEMENT Grasim Industries Ltd 292000 40.88 1400 CEMENT Sagar Cements Ltd 122000 8.6864 712 CEMENT The Ramco Cements Ltd 425000 40.8 960 CEMENT

TOTAL 153.6404

CHEMICALS & FERTILIZERS

Tata Chemicals Ltd 15200000 1124.8 740 CHEMICALS & FERTILIZERS

TOTAL 1124.8

ELECTRICITY & TRANSMISSION

Tata Power Co Ltd 6840962 47.886734 70 ELECTRICITY & TRANSMISSION

TOTAL 47.886734

ELECTRICALS & ELECTRONICS

Bharat Electronics Ltd 5676000 69.2472 122 ELECTRICALS & ELECTRONICS Voltas Ltd 9960000 976.08 980 ELECTRICALS & ELECTRONICS

TOTAL 1045.3272

ENGINEERING, CONSTRUCTION & INFRASTRUCTURE

Bharat Heavy Electricals Ltd 2000000 9.6 48 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE Engineers India Ltd 1190000 8.687 73 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE Larsen & Toubro Ltd 871750 122.045 1400 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE NBCC (India) Ltd (Previous Year Face Value ₹ 2) 4135000 19.021 46 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE Rites Ltd 750000 18.225 243 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE Thermax Ltd 105000 13.9125 1325 ENGINEERING, CONSTRUCTION & INFRASTRUCTURE

TOTAL 191.4905

HEALTHCARE

Cadila Healthcare Ltd 1060000 44.52 420 HEALTHCARE Sun Pharmaceutical Industries Ltd 1674435 600 586 HEALTHCARE

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TOTAL 644.52

HOTELS

Oriental Hotels Ltd 1076000 2.3672 22 HOTELS The Indian Hotels CoLtd 16071539 173.5726212 108 HOTELS

TOTAL 175.939821

INFORMATION TECHNOLOGY

INFOSYS 847578 113.4059364 1338 INFORMATION TECHNOLOGY Mindtree Ltd 81506 16.3012 2000 INFORMATION TECHNOLOGY Tata Consultancy Services Ltd 1036269 310.8807 3000 INFORMATION TECHNOLOGY Tata Elxsi Ltd 1435000 380.275 2650 INFORMATION TECHNOLOGY

TOTAL 820.862836

MEDIA & PUBLISHING

Shemaroo Entertainment Ltd 375000 2.4375 65 MEDIA & PUBLISHING

TOTAL 2.4375

METALS & MINING

Tata Steel Ltd 3926740 300.39561 765 METALS & MINING Tata Steel Ltd(Partly Paid)(t 2504 paid) 270869 6.3112477 233 METALS & MINING

TOTAL 306.706858

MOTOR VEHICLES & ANCILLARIES

Bosch Ltd 27868 10.03248 13800 MOTOR VEHICLES & ANCILLARIES Hero MotoCorp Ltd 100000 138 3000 MOTOR VEHICLES & ANCILLARIES Mahindra & Mahindra Ltd 1180000 354 800 MOTOR VEHICLES & ANCILLARIES Maruti Suzuki India Ltd 138500 94.18 6800 MOTOR VEHICLES & ANCILLARIES SKF India Ltd 166756 36.68632 2200 MOTOR VEHICLES & ANCILLARIES Swaraj Engines Ltd 105761 13.74893 1300 MOTOR VEHICLES & ANCILLARIES Tata Motors Ltd 11000000 330 300 MOTOR VEHICLES & ANCILLARIES

TOTAL 976.64773

OIL & NATURAL RESOURCES 0

Indian OilCorporation Ltd 2100000 18.9 90 OIL & NATURAL RESOURCES Reliance Industries Ltd 898000 179.6 2000 OIL & NATURAL RESOURCES

TOTAL 198.5

RETAIL 0

Shoppers Stop Ltd 200000 4.24 212 RETAIL Trent Ltd 15207540 1155.77304 760 RETAIL

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TELECOMMUNICATIONS

Bharti Airtel Ltd 75000 3.9225 523 TELECOMMUNICATIONS

TOTAL 3.9225

TRANSPORTATION & LOGISTICS

Container Corporation ofIndia Ltd 537500 31.7125 590 TRANSPORTATION & LOGISTICS TCI Express Ltd 149075 13.41675 900 TRANSPORTATION & LOGISTICS Transport Corporation ofIndia Ltd 350000 9.205 263 TRANSPORTATION & LOGISTICS

TOTAL 54.33425

MISCELLANEOUS

Finolex Industries Ltd 302368 18.6863424 618 MISCELLANEOUS Mahindra Lifespace Developers Ltd 500000 27.75 555 MISCELLANEOUS Westlife Development Ltd 505000 23.23 460 MISCELLANEOUS

TOTAL 69.6663424

FAST MOVING CONSUMER GOODS

Asian Paints (India) Ltd 536940 134.235 2500 FAST MOVING CONSUMER GOODS Bata India Ltd 200000 29.98 1499 FAST MOVING CONSUMER GOODS Colgate-Palmolive (India) Ltd 145000 22.33 1540 FAST MOVING CONSUMER GOODS Hindustan Unilever Ltd 70000 16.1 2300 FAST MOVING CONSUMER GOODS ITC Ltd 2518530 52.88913 210 FAST MOVING CONSUMER GOODS Nestle India Ltd 59000 97.35 16500 FAST MOVING CONSUMER GOODS Pidilite Industries Ltd 899795 161.9631 1800 FAST MOVING CONSUMER GOODS Procter & Gamble Hygiene & Healthcare Ltd 14500 18.415 12700 FAST MOVING CONSUMER GOODS Tata Consumer Products Ltd(FormerlyTata Global Beverages Ltd) 44273000 2789.199 630 FAST MOVING CONSUMER GOODS Titan Company Ltd 17875640 2690.28 1505 FAST MOVING CONSUMER GOODS Varun Beverages Ltd 190500 19.05 1000 FAST MOVING CONSUMER GOODS VST Industries Ltd 85276 28.14108 3300 FAST MOVING CONSUMER GOODS

TOTAL 6059.9361

FINANCE, SERVICES & INVESTMENTS

CARE Ratings Ltd 308000 12.9976 422 FINANCE, SERVICES & INVESTMENTS Central Depository Services (India) Ltd 490000 31.85 650 FINANCE, SERVICES & INVESTMENTS General Insurance Corporation of India 438592 8.8595584 202 FINANCE, SERVICES & INVESTMENTS GIC Housing Finance Ltd 1900000 22.04 116 FINANCE, SERVICES & INVESTMENTS HDFC Life Insurance CoLtd 300000 20.4 680 FINANCE, SERVICES & INVESTMENTS Housing Development Finance Corporation Ltd 482000 120.5 2500 FINANCE, SERVICES & INVESTMENTS ICICI Lombard General Insurance CoLtd 140000 19.6 1400 FINANCE, SERVICES & INVESTMENTS LIC Housing Finance CoLtd 1325000 55.65 420 FINANCE, SERVICES & INVESTMENTS The New India Assurance CoLtd 579538 8.8089776 152 FINANCE, SERVICES & INVESTMENTS

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TOTAL 300.706136

OTHER INVESTMENTS

INSTRUMENT VALUE (Cr.)

QUOTED EQUITY SHARES 22468.07252 UNQUOTED EQUITY SHARES 519

BODS/DEBENTURES 409 DEBT/EQUITY MUTUAL FUNDS 150 EXCHANGE TRADED FUNDS 39 VENTURE CAPITAL FUNDS 6.5 SUBSIDIARY COMPANIES 30

ASSOCIATE 56

CASH/FIXED DEPOSITS 17 TOTAL VALUE OF ALL INVESTMENTS 23694.5725

VALUE OF INVESTEMENTS PER SHARE 4683.15721 5,05,95,296

BOOK VALUE OF EQUITY INSTRUMENTS IS CALCULATED BASED ON LATEST STOCK PRICE (CMP AS ON 26TH MARCH 2021)

BOOK VALUE OF REST OF THE OTHER ASSESTS HAVE BEEN TAKEN AS IT IS FROM MARCH 2020 BALANCE SHEET. GIVEN THAT THE MARKET AND MOST OF THE ASSEST CLASSES HAVE APPRECIATED SIGNIFICANTLY ONE COULD EXPECT SIGNIFICANT INCREASE IN THE VALUE OF HOLDINGS OF OTHER ASSET

CLASSES AS WELL. HOWEVER IF WE CONSIDER THAT THEN BOOK VALUE CAN BE EVEN MORE THEN THE ABOVE CALCULATED.

NO OF EQUITY SHARES

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TATA INVESTMENT CORPORATION

LISTED EQUITY HOLDINGS ACROSS

VARIOUS SECTORS

FINANCE, SERVICES & INVESTMENTS 2%

FAST MOVING CONSUMER GOODS 43%

RETAIL 8%

OIL & NATURAL RESOURCES 1%

MOTOR VEHICLES & ANCILLARIES 7%

METALS & MINING 2% INFORMATION TECHNOLOGY 6% HOTELS 1% HEALTHCARE 5%

ENGINEERING, CONSTRUCTION & INFRASTRUCTURE 1%

ELECTRICALS & ELECTRONICS 8%

CHEMICALS & FERTILIZERS 8%

CEMENT 1% BANKS 4%

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VALUE OF INVESTMENTS OTHER

THAN QUOTED EQUITY

CASH/FIXED DEPOSITS 1% ASSOCIATE 5% SUBSIDIARY COMPANIES 2% VENTURE CAPITAL FUNDS 1% EXCHANGE TRADED FUNDS 3%

DEBT/EQUITY MUTUAL FUNDS 12%

BODS/DEBENTURES 33%

UNQUOTED EQUITY SHARES 42%

UNQUOTED EQUITY SHARES

BODS/DEBENTURES

DEBT/EQUITY MUTUAL FUNDS

EXCHANGE TRADED FUNDS

VENTURE CAPITAL FUNDS

SUBSIDIARY COMPANIES

ASSOCIATE

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SOME UNKNOWN FACTS ABOUT TATA GROUP

One of the most surprising Tata Motors facts is that while the company is present in a wide variety of businesses around the world, the company has never invested in alcohol, tobacco business. Moreover, the company has never sponsored any Bollywood movies.

Source-: https://blog.droom.in/facts-about-tata-motors

1. By 2018, every single day, 4.5-crore cups of Tetley tea were consumed across the globe, making Tata Global Beverages the world’s second largest tea company.

2. Established in 1868, it is India’s largest conglomerate, with products and services in over 150 countries, and operations in 100 countries across six continents.

3. With nearly 700,000 employees, it is India’s third largest employer after the Indian railways and defence forces.

4. Acknowledged as the founder of the Tata Group, Jamsetji is often referred to as the ‘father of Indian industry’.

5. The Tata Group has over 100 operating companies of which twenty-nine are publicly listed in India.

6. The Tata group has also been a significant contributor to India’s growth story. In 2018, it contributed about 4 per cent to the country’s GDP and paid 2.24 per cent of the total taxation in India, amounting to a whopping ₹47,195 crore—the highest by any corporate group.

7. An important component of the Tatas’ commitment to society and sustainability was employee volunteering, christened as Tata Engage. F In the first four years, over 150,000 volunteers participated from across Tata companies. The Pro-Engage Project gave

options to employees to mentor and coach non-profits to build and sustain their capacity for up to six months mainly during weekends,holidays and after-work hours.

8. In 1945, when management as a discipline was not fully developed even in Western countries, the Tatas set up Tata Industries—the first technocratic structure in Indian business.

9. In late-1880s, when there was no electricity in India, Empress Mills – Tatas’ flagship textile company, was providing healthy work environment in its factories through

installation of humidifying systems and dust-removing apparatus to protect the health of his employees and machinery; along with provident fund, gratuity and accident

compensation schemes, when they were unheard of in India, and several parts of the world.

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10. Sir Dorabji Tata (second Chairman of Tata Sons and son of Jamsetji Tata) provided cheap and clean energy to Mumbai through hydro-electric power generation in 1910 under the Tata Hydro Electric Company (now Tata Power), a century before the term ‘clean energy’ first became popular.

11. In 1952, Tatas started the Lakme brand of cosmetics as an outcome of a request from Prime Minister Jawaharlal Nehru’s Office.

12. In 1974, when the Chota Nagpur region had become the epicenter of the smallpox epidemic, the World Health Organization (WHO), requested the collaboration of Tata Steel. The company obliged with resources and manpower. In six months, 20,500 villages and 82 towns were inoculated. By 1975, India was declared free of smallpox, for the first time in history.

13. In 1981, Tata Chemicals became one of the first companies in India to provide employee stock options.

14. Employees were even offered loans on lenient terms to buy debentures, along with special assistance of external agencies, who provided them with investor education. 15. In the 25 years after India’s economic liberalization, the Tata companies have created more wealth for shareholders than large conglomerates in India like Reliance and Aditya Birla and similar conglomerates in other countries including Siemens, Mitsubishi, GE and Berkshire Hathaway.

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