We believe Tata Investment Corporation is one of the best managed companies in India today, sharing the Tata group spirit of taking good care of shareholders. We have been observing the company’s work for the last one year, and recently initiated our long term investments in this company, and we have also recommended our network of investors to invest Tata Investment Corporation gradually over the next few weeks (to average out market price fluctuations) and hold for at least 3 years, ideally 5+ years.
As of 31 March 2010, the company’s total market value of quoted investments and estimated value of unquoted investments is about Rs 3638 crore, with investments in 197 companies (excluding mutual funds). The Company continues to invest in Tata and non-Tata companies, both in the listed and unlisted categories, though investments in Tata companies generally constitute a larger proportion and are of a longer term and strategic nature.
Following is an excerpt from the company’s FY2010 annual report that very much reflects our views on investments in the near term.
The current index levels reflect an average price/ earnings (P/E) ratio of about 20 times FY09-10 earnings and 17-18 times FY10-11 estimated earnings which is at the higher end of the spectrum of earnings valuations. For an investment company like ours, this situation is therefore to be viewed with a degree of caution for the near-term future because, despite the general level of optimism, one cannot ignore certain fundamental negative factors such as the large fiscal and current account deficits, the increasing level of Central and State Government borrowings and subsidies, the continuing high level of inflation and the re-emergence of high commodity prices.