THOSE WHO CAN'T AFFORD 300 BUCKS FOR TATA MOTORS CAN INVEST IN
TATA MOTOR DVR AROUND 200-210 LEVELS FOR LONG TERM
VOTING RIGHT DIFFERENCE + 5% HIGHER DIVIDEND TRADING @ 34% DISCOUNT
TATA MOTOR DVR AROUND 200-210 LEVELS FOR LONG TERM
VOTING RIGHT DIFFERENCE + 5% HIGHER DIVIDEND TRADING @ 34% DISCOUNT
What is a DVR share?
DVR stands for Differential Voting Right. Companies issue DVR shares to prevent any hostile takeover and dilution of voting rights. This also helps strategic investors who are looking at a big investment in a company, but with fewer voting rights. A Tata Motor DVR has 10 per cent voting right as compared to an ordinary Tata Motor share.
Why should retail investors invest in DVRs?
DVRs are suitable for retail investors who are not concerned with voting rights as they don't intend to affect the decision making of the management. The same company's shares are available at a lesser price for the same fundamentals. Besides, Tata Motors DVR fetches 5 per cent higher dividends as compared to ordinary shares of Tata Motors.
What are the disadvantages?
DVR shares are usually thinly traded. Also, during bearish phase, the discount over Tata Motors shares could widen and this could be a dampening factor.
