Tata Motors DVR shares and Jain Irrigation DVRs gained on Thursday after Bombay Stock Exchange announced rules for including shares with differential voting rights (DVR) in its benchmark indices.
Tata Motors DVRs zoomed nearly 10 per cent to an intraday high of Rs 383.95, while Jain Irrigation Systems DVRs surged over 17 per cent to a high of Rs 55.90.
A DVR share is like an ordinary equity share, but it offers fewer voting rights to the shareholder.
The Bombay Stock Exchange yesterday announced rules for including shares with differential voting rights in Sensex, BSE-100, BSE-200 and BSE 500. The Bombay Stock Exchange will rebalance these indices in June this year.
The Bombay Stock Exchange said that DVRs of companies may be included in indices if the ordinary share is part of the index and DVRs should be at least 10 per cent of total outstanding shares of the company.
Analysts say this move may lead to re-rating of the DVR stocks. These stocks may witness buying from passive funds who track these BSE indices.
As of 11.23 a.m. Tata Motors DVR traded 5.85 per cent higher at Rs 371, while Jain Irrigation DVR traded 7.76 per cent higher at Rs 51.35. Both the DVRs outperformed the benchmark Nifty which was down 0.32 per cent.
Here’s all that you need to know about DVR shares.
What is a DVR share?
A DVR share is like an ordinary equity share, but it offers fewer voting rights to the shareholder. Companies issue DVR shares to prevent any hostile takeover or dilution of voting rights.
Should retail investors invest in DVRs?
DVRs may be suitable for retail investors who are not concerned with voting rights. DVRs are typically prices at a discount to ordinary shares. In some cases, DVRs may fetch higher dividends as compared to ordinary shares. However, DVR shares are usually thinly traded. Also, during bearish phase, the discount between DVR and ordinary shares may widen.