Company Overview:

Tata Investment Corporation Ltd. (TIC) ventures as a non-banking financial company. Formerly known as Investment Corporation of India, the company is primarily involved in investing in long-term investments such as equity shares and equity-related securities. TIC was incorporated in 1937 and is based in Mumbai. Trusts, funds and other financial vehicles. This class includes legal entities organized to pool securities or other financial assets, without managing, on behalf of shareholders or beneficiaries. The portfolios are customized to achieve specific investment characteristics, such as diversification, risk, rate of return, and price volatility. These entities earn interest, dividends, and other property income, but have little or no employment and no revenue from the sale of services. Tata Investment Corp Ltd (TICL) operated as a non-banking financial company focused on investment services. The company provides services such as investing in long term investments in equity shares, listed and unlisted, debt instruments and equity related securities of companies in a range of industries. It also offers investment portfolio such as quoted and unquoted securities of companies, including Tata Companies, which are engaged in various businesses. TICL provides investment in units of mutual funds, venture and bonds capital funds. The company invest in different sectors such as cement, banks, chemicals and fertilizers, electricity and transmission, electrical and electronics, construction and infrastructure, engineering, fast moving consumer goods, finance, services and investments, healthcare, hotels, information technology and metals and mining, among others. The company operates in India. TICL is headquartered in Mumbai, Maharashtra, India. The company reported revenues of (Rupee) INR2, 538.5 million for the fiscal year ended March 2022 (FY2022), an increase of 55.6% over FY2021. In FY2022, the company's operating margin was 89.8%, compared to an operating margin of 87.4% in FY2021. In FY2022, the company recorded a net margin of 84.4%, compared to a net margin of 94.4% in FY2021. The company reported revenues of INR1, 069.5 million for the second quarter ended September 2022, an increase of 4.9% over the previous quarter.

Technical overview:

TICL has shown strong price volume brake out above the Levels of 1770 and shown aggressive move towards the levels of 2880 towards all time high and with Significant value buying pressure. Stock then corrected from high with low volumes due to Stock being transferred to ASM category by Exchange due to stock price rising significantly and now again stock is showing Reversal from the levels of 1900, showing flag pattern and its facing resistance at upper end of flag at levels of 2170 any move above the price will push price towards levels of 2460-2500 and then we can see consolidation in price in range of 2400-2700 before any bigger price action.

Fundamentals View:

TICL a Tata Group company with high level of corporate governance and with strong promoters holding of 73.38% and with small portion left with public holding. TICL has given strong dividend payout of Rs. 55 per share giving dividend yield of 2.5-3% from current price, TICL has given EPS for current year F.Y 2022-23 at 38.58 (6month EPS) as against 39.80 for F.Y 2021-2022, so stock is poised to give resilience outcome in coming Qtr and stock price has to rise higher in coming years. The Standalone Operating Income of the Company is derived from a mix of dividend, interest income, income from derivatives and other income. The profit from the sale of long-term equity investments (post tax) for the year ended 31st March, 2022 is 430.61 crore as compared to 209.72 crore for the FY 2020-21 which have been carried at Fair Value through Other Comprehensive Income. The standalone profit before tax for the year under review is ` 228.09 crore as against ` 120.01 crore for the FY 2020-21, whereas the profit after tax for the year under review stands at ` 201.36 crore as against ` 108.83 crore for the FY 2020-21. The Consolidated profit after tax for the year amounted to ` 214.46 crore as compared to ` 154.62 crore for the FY 2020-21. The total number of companies whose issuances, equity or debt in which your Company has invested stands at 87 as on 31st March, 2022, out of which 73 are Quoted and 14 are Unquoted companies.

VALUE CREATED:

“Value Created” is a measure which evaluates the wealth created net of the capital invested by the shareholders. We evaluate your Company’s growth a 15-year rolling basis computing “Value Created” by reducing the Shareholders Funds from the aggregate of the Realizable Value of Investments and Net Current/Fixed Assets. The following table compares the Value Created vis-à-vis the Benchmark and the Compounded Annual Growth Return (CAGR). Shareholders will be pleased to note that the “Value Created” has recorded a compounded annual growth rate (CAGR) of 16.44% vis-à-vis BSE 200 of 11.08% over the period 31st March, 2007 to 31st March, 2022. It is heartening that this performance has been achieved with a prudent allocation in unlisted equity and fixed income securities which reduces the volatility risk of the portfolio. Further, the Company has distributed ` 1,503.32 crore over the 15 year period as dividends to its shareholders and returned capital vide a buyback of ` 450 crore in the financial year 2019. The aggregate of the dividends distributed and the value of the Buyback, if included in the amount of Value Created, the resultant CAGR would stand enhanced approximately to 17.16 %. The Company invests in Tata and Non-Tata companies, both listed and unlisted, though investments in Tata companies constitute a larger portion and may be considered for a longer term and are strategic in nature. The Company endeavours to evaluate opportunities and invest considering the macro economic conditions both globally and domestically.

KEY IMPACT ON INVESTMENT:

• Global Markets and Macro- Economic Situation:

  The world today is overwhelmed with supply side disruptions in food grain supplies, basic metals and commodities resulting in inflation not experienced by the world for more than two decades. In the east, China has chosen to continue with its Zero covid policy resulting in shutting down ports, cities and production facilities wherever the threat of Covid has raised its ugly head. Reports as late as March 2022 state that there are ships waiting to dock in Shenzhen which handles about a quarter of all U.S. bound Chinese manufactured exports. In Europe, the war has disrupted oil, gas and agricultural supplies including staple products used by households namely, palm oil and sunflower oil - indispensable in many households and used in the food services industry. Record-high food inflation is tightening its grip on the global economy, most critically in developing nations where financial distress is also contributing to increased political instability. Global bond yields have jumped on structured concerns indicating an end to the pandemic-era ultra-loose monetary policies and resultantly several EM central banks are raising rates to counter high inflation in their countries. Further, it is believed that even if inflation were to decline from current levels, as forecasted by many research firms, and settle at long-term average rates over the next few quarters, reports suggest that central banks would still have to raise rates significantly to align rates with long-term inflation.

• Indian Economy and Corporate Earnings:

  The Indian economy for the quarter ended March 2022 showed tremendous resilience to the global macro disruption. The Centre’s gross tax revenue for FY22 exceeded the budget estimate by almost ₹5 lakh crore, adding up to ₹27.07 lakh crore for the year against an estimated ₹22.17 lakh crore. The sharp rise in the collections lifted the tax-GDP ratio to the highest ever 11.7% – 6.1% for direct taxes and 5.6% for indirect taxes. The gross corporate taxes for FY22 were ₹8.6 lakh crore, up 56% from a year ago while personal income taxes rose slightly less by 43% to ₹7.48 lakh crore. The value of goods exported from India witnessed 40 percent growth during the financial year 2021-22, hitting a record $417.8 billion, surpassing the target set by the government by almost 5 percent. India exported $250 billion worth of services in 2021-22, aggregating the total exports go goods and services from India at almost $670 billion in 2021-22. On the other hand, merchandise imports increased significantly to $615-617 billion, respectively. As a result, the merchandise trade deficit is projected to nearly double to around $194-196 billion in FY22 from $102.2 billion in FY21. The services trade surplus is likely to rise by around 18% to $106-108 billion in FY22, which has helped contain the Current account deficit.

• RURAL SLOWDOWN IN ECONOMY:

  Another area of concern which India Inc has been highlighting is a rural slowdown in the rural economy. Corporates expect rural demand to remain soft as higher prices have altered consumer spending and preferences. FMCG companies say that inflationary pressures have disrupted demand in both rural and urban areas, with rural demand being significantly weak. Demand trends in the automobile sector too highlight weakness in rural demand. Though auto retails in India in FY22 rose 7% year-on-year, the two-wheeler segment, an important indicator of the rural economy’s health, as nearly half of all two-wheelers are sold in rural areas, showed the lowest growth in FY22.

OVERVIEW:

Company will continue to look for opportunities to invest in companies which have consistent growth prospects with high quality earnings. In new age companies where valuations are a concern and whose earnings will fructify at a later stage in their development, the Company has made a small allocation of capital. Thus, the equity markets which recorded an unprecedented appreciation over the last 18 months may not be as buoyant in the next fiscal. Your company recorded an appreciation in its NAV of 38% in Fy2122 and realized gains of ` 430.61 crore on equity investments (post-tax) taking advantage of the buoyant markets. Going forward the performance will be dependent on how global factors, the economy and corporate earnings shape up over the second half of the year. The Company will continue to allocate its capital between listed equity, fixed income and unlisted equity. Management will evaluate and select investments based on high quality governance, long term sustainability and strength of the investee company’s balance sheets.