Diversified Stocks in India

What are diversified stocks?

Diversified companies - often called conglomerates - run several unrelated businesses inside one listed company. One company might, for example, make textiles, chemicals and cement, or combine manufacturing with financial services. Because no single industry describes them, the NSE classifies them as diversified.

Many of India's oldest business groups started this way, although several have since separated their businesses into individually listed companies.

How to look at a diversified company

Sum of the parts (SOTP)

Analysts value each business separately - as if it were a standalone company in its own industry - and add the values together.

Conglomerate discount

The market often values a diversified company at less than the sum of its parts, because investors cannot choose which businesses to own and capital can flow from strong divisions to weak ones.

Segment reporting

Listed companies report revenue and profit by business segment. Reading these shows which divisions are growing and which are dragging.

Demergers

When a conglomerate splits a division into a separately listed company, shareholders receive shares of the new company. Demergers can unlock value that the conglomerate discount was hiding.

Risks to know

A diversified company can be harder to understand and value, and weak divisions can hide inside strong ones. Check how capital is allocated between businesses and how the group treats minority shareholders when it moves money between divisions.

How to invest in diversified stocks

1. 1

   Open a demat and trading account

   A demat account holds your shares electronically; a trading account lets you buy and sell them. With GoPocket you can open both online in a few minutes with your PAN, Aadhaar and bank details.

2. 2

   Add money

   Transfer funds to your trading account by UPI or net banking.

3. 3

   Research the company

   Pick a company from the list above and open its page to see its share price chart, financial performance and shareholding before you decide. Compare it with other diversified stocks on business quality, debt, growth and valuation.

4. 4

   Place your order

   Search for the stock in the GoPocket app or web platform, choose the quantity, and place a delivery order to hold the shares in your demat account. A limit order lets you set the most you are willing to pay.

5. 5

   Track and review

   Follow the company's quarterly results and news. Spreading your money across several companies and sectors reduces the damage if one investment goes wrong.

Terms used on this page

LTP

Last traded price - the price at which the stock last changed hands. The figure below it is the change from the previous day's close.

Market cap

Market capitalisation: share price multiplied by the number of shares issued. It measures a company's size in the market and is shown here in rupees crore (1 crore = 1,00,00,000).

Cap band

Whether a company is large, mid, small or micro cap, based on its market capitalisation. Larger companies tend to be less volatile.

Sector and industry

The NSE groups companies into broad sectors (such as Financial Services) and narrower industries within them (such as Banks), based on what they mainly do.

Trading graph

How the share price has moved during the latest trading session, from the 9:15 open to the 3:30 close. The dashed line is the previous day's closing price.