Reliance Capital - A play on Financial services

 

Rel Cap is one of the leading and fastest growing private sector financial services company.It is the largest asset management co in India.It also offers life insurance and general insurance products through its subsidiaries.It has sizable private equity and proprietary investments.It recently commenced its stock broking business and will soon start consumer finance and asset recovery business.

 

CMP: 971

Market Cap: 23,860crs

 

Asset Management

Reliance Mutual Fund has a total Assets under Management(AUM) of Rs.59,143.47crs as on 30th May,2007.

PMS AUM at end of FY07 - Rs.30bn

Offshore Fund - Current AUM US $125mn

 

General Insurance

Pre-tax profit of Rs.224mn in FY07.It has approx.45mn retail customers including 35mn customers of RCOM and 5mn customers of REL.Retail business: 55%.Corporate business:45%

 

Life Insurance

Gross Premium for FY07- Rs.10bn

 

Broking

Reliance Money has 75,000 customers and more than Rs.500crs daily turnover happening.It has captured 1% of the total market share. It also distributes life and general insurance products,mutual fund distribution,maketing of credit cards.Only 4.9% of household savings invested in equity/equity related assets.

 

Investments in listed and unlisted companies

Adlabs Films        12,55,000 shares by way of Rel Cap and 20600000 shares by Rel Land Pvt.Ltd.

RCOM                  1,78,27,158 shares

Rel Energy            5.79% stake was transferred to a group co.By this deal,they booked profits of about Rs.350crs.

RIL                       1,34,60,295 shares

RNRL                    1,64,93,158 shares (1.35%)

Spanco Tele          35,50,000 shares (14.96%)

TV Today               11.9% stake

 

Unrealised gains of Rs.27.2 bn(consolidated) on listed investments as on March 31,2007 (Remember,this is inclusive of REL).

Unlisted companies include yatra.com ,44% stake in DTDC, 31% stake in BLR India,and many others.

 

Consumer finance and Asset Reconstruction business is yet to launch.Every subsidiary is 100% owned.

Edited by deveshkayal - 13/Jun/2007 at 11:12am

I was interacting with some of my friends, who are dealers and are constantly in touch with the stock, money and Fx market. All of them agree that junior Ambani is a great trader and they say he has expertise in feeling the pulse of the market.His expertise can be realised in only the business of Reliance Capital and that is the reason, why Rel Cap is doing so well.

Margin Expansion is expected to lag revenue growth due to concentration on higher volumes,higher operating expenses as this businesses are in an expansion phase and lower income in the initial stages of the insurance business.

If it does a 45% CAGR its market cap would cross a trillion rupees- backed by an expanded PE!!! I think R cap should be more of a 35% grower with a possibility of higher growth if the market does well.

Edited by basant - 03/Jun/2007 at 10:49am