List Of DVR Shares In India: Companies have more than one way of raising capital and it is not limited to equity or debt. Raising capital through equity reduces the interest on capital but companies end up sacrificing a percentage of voting rights.
On the other hand, banks offer debt but at high-interest rates that make it expensive. That’s where the concept of DVR shares comes into the picture. In this blog, we’re going to talk about DVR shares and end it with the full list of DVR shares in India.
Before we get to the list of companies that offer DVRs in India, let’s understand the concept of DVRs, their importance, and why companies use this type of security for raising capital.
What Are DVR Shares?
DVR stands for Differential Voting Rights. They were first introduced to the market in India by Tata Motors. If you visit any stock screener and type “TATA MOTORS”, you’ll notice that there are two separate shares that are listed.
One is the ordinary shares which are offered by every other listed company. The 2nd type of share is DVR. These shares are offered at a discounted price than ordinary shares and have different voting rights as well as dividend rights.
It is a smart way of raising capital while reducing the loss of voting rights. Instead, shareholders are offered a higher dividend than ordinary shareholders. This type of share can assist companies to raise additional capital, without sacrificing voting rights.
According to the Companies Act 2013, a business that has reported profits in 3 preceding years or more can issue DVRs. Another important factor is regularly filing returns with no discrepancies during the same period.
Difference Between Ordinary Shares And DVR Shares
Here is a comparison of Ordinary Shares and DVR Shares, Keep reading to find out more.
1. Voting Rights
The main difference in Differential Voting Rights shares is, as stated in the name, voting rights. A majority of retail and individual investors do not attend the annual general meeting of companies.
This makes their voting rights obsolete as they don’t exercise them. In such cases, DVRs are an alternative investment opportunity to ordinary shares.
DVR shares offer a higher dividend to shareholders than ordinary shares. This is to compensate them for their lower voting rights. On the other hand, ordinary shares offer more voting power and a lower dividend.
3. Share Price
DVRs and ordinary shares are priced differently in the market. This is despite the fact that both securities are issued by the same company. DVR shares cost lower due to the lower voting rights that they offer.
Features Of DVR Shares
1. No Obligation To Participate In Company Decisions
As a DVR shareholder, you have no requirement to attend the meetings of the company. The main focus is to earn dividends and reduce your involvement in the daily operations of the company.
As you have forfeited those rights, you can focus on large profits and dividends only. To investors that want voting rights, it can be a disadvantage. This is especially true for institutional investors who want a controlling stake.
Taking a look at the price per share, DVRs are quite affordable. This is in direct comparison with the ordinary shares of the company.
For example – As of Nov 23, 2022, Tata Motors’ share price is ₹428 per share. Tata Motors DVR is priced at ₹219 per share. As you can see, the price difference is almost 50%.
Companies are aware that DVRs offer lower voting rights. They compensate for this by making the share price affordable. This allows investors to buy more shares and increase the dividend potential.
Another way DVR shareholders are compensated is through higher dividends. As they have lower voting rights, the company pays a higher dividend to DVR shareholders.
The difference between earnings can go as high as 20%. This figure can go even higher when you consider the share price difference. However, the difference in ordinary and DVR share dividends has to be significant.
If the dividend advantage is fractional, then investors may not lean towards DVRs over ordinary shares.
Does Tata Motors DVR Give Dividend?
In the case of TATA Motors DVR shares, the holders are entitled to receive a dividend at a 5% higher rate. This is 5% more than ordinary shareholders, as per the company’s financial reports.
List Of DVR Shares In India
There are very few DVRs that are listed in India. Equity-listed shares largely outnumber the number of DVR shares.
Here is a full list of DVR shares in India.
|Current Market Price ( As Of 23 Nov 2022)
|Tata Motors DVR
|Stampede Capital – DVR
|Jain Irrigation Systems – DVR
|Future Enterprises – DVR
Although DVRs offer good benefits over ordinary shares, they are yet to gain traction in the Indian markets. We hope to see a longer list of DVR shares in India in the near future. That’s all for this blog. We hope you found it informative and intriguing. Happy Investing!
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