Godrej split: What it means for the group's listed companies

livemint.com:

restructuring of the group, announced late Tuesday, will result in two entities: Godrej Enterprises Group and Godrej Industries Group. While Godrej & Boyce Mfg. Co.

Ltd will be owned by the families of siblings Jamshyd Godrej and Smita Crishna, operating within the Godrej Enterprises Group, the families of brothers Nadir and Adir Godrej will inherit five listed companies—Godrej Industries Ltd, Godrej Properties Ltd, Godrej Agrovet Ltd, Godrej Consumer Products Ltd, and Astec Lifesciences—under Godrej Industries Group. As at the end of March, Godrej Industries held a 23.7% stake in Godrej Consumer Products, 47.3% in Godrej Properties, and 64.88% in Godrej Agrovet. Godrej Agrovet, in turn, owns a 64.76% stake in Astec Lifesciences as a promoter.

The combined valuation of these five listed companies is ₹2.4 trillion. Historically, valuations of group companies have typically increased following such a split, given the clear alignment of powers and a transparent shareholding pattern, said Sachin Jain, head of investments at family office Sukvi Ventures. With ownership well-defined, the direction of business becomes clearer, board resolutions can be passed unanimously, and stakeholders know which vision to pursue, he added.

“Personally, I have been steadily accumulating shares of family-owned holding companies like Tata Investment Corporation, Bengal and Assam Company, Tube Investments, Mahindra and Mahindra, Godrej Industries, and Bombay Burmah Trading Corporation. These firms consistently trade at a discount of 50-70% compared to the value of the companies they hold," Jain said. He explained that buying stakes in holding companies offers the potential for value-unlocking if they decide to demerge their investments or reduce