Vying for market leadership across businesses: RCFT is the largest player in the asset management business in India and is targeting market leadership across most other businesses like life insurance and brokerage. We expect RCFT to emerge as a key player in most of its businesses on the back of rapid branch network expansion, manpower addition, and intensive cross-selling among Reliance ADAG customers.

Insurance - a key value driver: Within a period of less than two years, RCFT has emerged as the fastest growing insurance company. Reliance Life is now the sixth largest private player in India based on annualized first year premium (APE), while Reliance General Insurance is the third largest private player based on gross premium written YTD July 2007. The management aims to be among the top-3 players in the insurance business in the next two years. We believe insurance valuation would be a key driver for the stock going forward, as RCFT owns 100% of its life and non-life insurance ventures.

Creating scale across businesses; Buy: We expect huge value accretion, as RCFT's new businesses (insurance, NBFC, and broking & distribution) attain scale. Our SOTP-based price target is Rs1,574 per share, an upside of 31%. We initiate coverage with a Buy.