The Hidden Price Tag: How Are Asset-Heavy Giants Valued | Quick ₹eads

by Karnivesh | 26 December, 2025

The "Factory vs. The Landlord" Dilemma

Imagine you are walking down a high street. On your left is a software company. It rents a small office, owns a few laptops, and makes millions selling code. To value it, you look at its earnings its Price-to-Earning (P/E) ratio.

On your right is a massive luxury hotel. It owns the land, the building, the furniture, and the art in the lobby. If you value this hotel based solely on last year's room bookings (earnings), you might miss the point entirely. Why? Because the land alone might be worth more than the hotel’s operations for the next 20 years.

This is where the Net Asset Value (NAV) comes in.

As consultants, we often tell clients: "Stop looking at the income statement. Look at the balance sheet." For asset-heavy companies like Real Estate Investment Trusts (REITs), Infrastructure trusts, and Holding Companies NAV is the true north. It answers a simple question: "If we shut down this business today and sold everything, what would we have left?"

The Holding Company Discount: Buying Gold for Silver

One of the most fascinating stories in the Indian market is the "Holding Company." These are companies that exist primarily to hold shares in other companies.

Take Bajaj Holdings & Investment Ltd (BHIL). It’s essentially a massive vault holding shares of Bajaj Auto and Bajaj Finserv.

If you calculate the value of all the shares BHIL owns (as of mid-2025), the total Net Asset Value is roughly ₹2,20,000 Crore.However, the stock market trades the company at a Market Cap of only ₹1,56,890 Crore.​

This is what we call the "Holding Company Discount." You are effectively buying ₹100 worth of assets for roughly ₹71.

The "Free Lunch" in the Market? Comparing Bajaj Holdings' intrinsic value (NAV) to its actual market price 

The "Free Lunch" in the Market? Comparing Bajaj Holdings' intrinsic value (NAV) to its actual market price

Why does this happen? Analysts discount the NAV because of the "Conglomerate Tax." Investors fear they can’t access that value immediately you can't just force Bajaj Holdings to sell its Bajaj Auto shares and give you the cash tomorrow. But for a patient investor, tracking the NAV gap is like watching a coiled spring.

The Landlord's Ledger: Embassy Office Parks REIT

Now, let’s look at a pure asset play: Embassy Office Parks REIT. This isn't a company that "makes" things; it collects rent.

In late 2025, Embassy’s portfolio included massive office parks in Bangalore and Mumbai.

• Gross Asset Value (GAV): ~₹64,000 Crore (The value of all its buildings).​

• Net Debt: ~₹20,000 Crore (The mortgages on those buildings).

• Net Asset Value (NAV): ~₹44,000 Crore.

When you divide that NAV by the number of units (shares) outstanding, you get a "Fair Value" per share of roughly ₹463.But in the market, it often trades around ₹428.​

The Story: When an analyst sees this, they say, "The stock is trading at a 7-8% discount to NAV."It means the market is pessimistic about future rents or vacancy rates. If the stock were trading above ₹463, it would be at a "Premium to NAV," implying investors expect rents to skyrocket. For REITs, P/E is useless because depreciation (a non-cash cost) destroys their "Earnings" on paper, even though their cash flow (rent) is healthy.

The Developer's Inventory: Godrej Properties

Finally, consider a real estate developer like Godrej Properties. Unlike a factory that sells widgets every day, a developer sells its inventory (land and apartments) over 5-10 years.

Analysts typically value Godrej Properties using a "NAV approach" rather than P/E.

• They look at the company's "Land Bank" hundreds of acres waiting to be developed.

• They estimate the future cash flow from selling apartments on that land.

• They discount it back to today’s value.

Recent reports value Godrej’s Gross Asset Value at over ₹1.1 Lakh Crore. If you looked at their P/E ratio, it would look astronomically expensive because they haven't sold all those apartments yet. But viewed through NAV, you see the potential future cash flow sitting on the balance sheet today.​

Now let's look at a pure asset play in a different flavor: Indian Hotels Company Limited (IHCL), which owns the legendary Taj Hotels brand.

IHCL is fundamentally different from Bajaj Holdings. Unlike a holding company that just owns shares, IHCL owns and operates physical hotels. These buildings, furnishings, art collections, and kitchen equipment they're all on the balance sheet. But here's the puzzle analysts solve every day: How much are those 57,000+ hotel rooms really worth?

The Asset Story: As of March 2025, IHCL's balance sheet showed:

• Total Assets: ₹17,616 Crore​

• Total Liabilities: ₹6,425 Crore (excluding equity)

• Net Asset Value (Book Value): ₹11,161 Crore​

• Book Value per Share: ₹81.3​

The stock trades at ₹740 per share, which means the Market Cap is ₹1,05,348 Crore.​

IHCL's Hidden Asset Base: Market Cap vs Net Asset Value showing the 10% premium 

IHCL's Hidden Asset Base: Market Cap vs Net Asset Value showing the 10% premium

What an Analyst Sees: When they divide the Market Cap by the Book Value, we get a Price-to-Book ratio of 9.1x. This seems expensive. IHCL is trading at a significant premium to its NAV, not a discount like Bajaj Holdings.​

But why? Because of one critical thing: growth.

Unlike Bajaj Holdings (where you're buying static shareholdings), IHCL's assets are working. Those 57,000+ hotel rooms generate Revenue of ₹8,335 Crore annually, with Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA) margins expanding to 33.2%. The company is not just sitting on the assets it's deploying them productively.​

Analysts calculate a "Forward NAV" not just today's book value, but the future value created by operating these hotels. With a projected CAGR of 16% in revenues through FY28, the future earnings power embedded in these assets justifies the premium.​

IHCL presents a different NAV narrative: "What You Own Today" vs. "What You Can Earn Tomorrow." The premium to NAV isn't a warning; it's a reflection of the market pricing in growth. This is why P/E still matters for IHCL because the company is trading on future earnings, not just current assets.

The contrast is striking:

• Bajaj Holdings = Buy the Assets at a Discount (static value play)

• IHCL = Buy the Assets as a Growth Engine (dynamic value creation)

Takeaway

Next time you see an asset-heavy company, ignore the P/E ratio for a moment. Ask yourself the NAV story:

1. What do they own? (Add up the Assets)

2. What do they owe? (Subtract the Liabilities)

3. What is left for me? (Divide by Share Count)

If the market price is lower than that number, you might just have found a bargain that the "earnings watchers" missed.