0 per cent dividend but 200 per cent returns? This holding company could have 3X’d your investment—Do you own it?
JSW Holdings has delivered exceptional returns, with a 154 per cent gain over the past three months and over 200 per cent year-to-date (YTD).
JSW Holdings has quietly emerged as one of the year’s most impressive investment stories, delivering jaw-dropping returns of over 200 per cent year-to-date. Despite its unique position as a Core Investment Company with significant stakes in JSW Steel and other group companies, it stands out for its exceptional growth while maintaining a 0 per cent dividend yield—a rare combination in the world of holding companies.
The company's investments include equity holdings in both publicly traded (quoted) and privately held (unquoted) companies, as well as compulsory and optionally convertible preference shares in various group companies.
A significant portion of its investments is concentrated in JSW Steel Ltd, along with holdings in JSW Energy, Jindal Steel & Power, and Jindal Stainless. As a Core Investment Company (CIC), its primary revenue sources are interest and dividend income.
The company also supports several JSW Group-related entities by providing loans and securing financing for these companies through share pledges of its JSW Steel holdings.
How Did It Perform in Q2FY25?
In Q2FY25, the company reported revenue of Rs 162.18 crore, with a substantial portion of Rs 133.43 crore coming from dividend income. Due to the volatility of dividend income, this led to an over 80 per cent year-over-year rise in revenue for the quarter. However, the company’s highest quarterly revenue was in September 2022 at Rs 337 crore.
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For Q2FY25, net profit stood at Rs 120 crore, a substantial increase from Rs 63 crore a year ago.
Dividend Payout: Do Shareholders Benefit?
As a holding company, one might expect dividend payouts to shareholders. Unfortunately, this is not the case here, with the company’s dividend yield at approximately 0 per cent. For investors looking to benefit from dividend income, it’s often preferable to choose a holding company that shares its dividend income with shareholders.
In India, holding companies generally trade at a significant discount to their Net Asset Value (NAV), known as the "HoldCo discount." This discount typically averages around 68 per cent, meaning that these companies trade 68 per cent below their NAV.
Investment Returns
Despite not paying dividends to shareholders, JSW Holdings has delivered exceptional returns, with a 154 per cent gain over the past three months and over 200 per cent year-to-date (YTD). This stock has provided a triple return on investment for anyone who invested at the start of the year.