Adag group future - can it be an investment opportunity?


(Jiten Parmar) #61

Reliance Capital has the following businesses.

  1. Reliance Nippon Assset Management - separately listed. Company holds 42% - Business doing fairly well.
  2. Reliance Home Finance - separately listed. Company holds 47% - Doing very well.
  3. Reliance General Insurance - held with Nippon. Will be listed/demerged in the future - Doing very well.
  4. Reliance Life Insurance - held with Nippon. Will be listed/demerged in the future
  5. Reliance Securities - brokerage business
  6. Reliance Money - rebranded from Reliance Commercial Finance. Has more tham 16000 cr loan book
  7. Investments in companies - like Yatra, paytm, Prime Focus, etc. This is about 14000 cr and is being liquidated.

For 1 to 4, it will have holding company discount. 5 is a small biz. 6 is a business which will grow very well, as Devang Mody is heading it (ex- Bajaj Finance).

Market cap is about 12000 cr. One can do a SOTP of all these businesses.

2 big overhangs behind it. First is RCom issue. 2nd is 2G trial.

It’s at a significant discount to book value of about 640 Rs. Has got good earnings and pays good dividend.

There will be some negatives in the stock. But for me, that’s a risk I am willing to take as it’s priced dis-proportionately.

My views can be considered biased, as it’s my largest position.


(khushi) #62

TTM EPS - RS. 30.76 (Standalone)
TTM EPS - RS. 52.22 (Consolidated)

Book value over RS. 640.

I expect a PE multiple of at least 12X (Consolidated) or 20X (Standalone) or PB of 1.2X sooner or later once correction n market gets over.

Surely deserves a Re-Rating.


(learning) #63

Debt should be replaced by selling for investments.


(gagandeep) #64

Dear @jitenp @shahparag,

Thanks for sharing details on Reliance cap, it helps a lot to new investors like me.
i have recently added Reliance Cap as 10% of my PF, planning to increase more, but one thing bother’s me is pledging from promotors in increased a lot, since I am a novice, I really don’t understand exactly how pledging can be risky and exploited by promoters?
also, how should we adjust the valuation w.r.t %age of pledging? so we adapt to the risk that is building.

Thank you!
Best Regards,
Gagan


(Jiten Parmar) #65

Promoter pledging is a negative, for sure.


(shahparag) #66

pledging is defintely negative as jitenbhai pointed out , secondly creating a 10% exposure of portfolio value in one shot is not a good investing strategy either untill you believe in highly concentraded portfolio and high conviction for stock .
for me high conviction only built with time ( like 3-6-9 months reading about stock , looking at price movement & sector stock relative performance , qtrly numbers etc .etc…


(shahparag) #67

i think recent sell off in market is affecting it too …however rcap & infra both holding on to their last lows is a surely good sign …however if mkt to fall further then how strongly they can hold needs to be watched … but things looks better then in nov17 ( when the topic initiated ) and prices are again there …


(gagandeep) #68

@shahparag I agree with your comment, actually, i got completely out of the market during Jan 2018 due to high valuation concerns, as most stocks were running daily 4-5%, but i quickly realized that staying totally out of market is also not a good idea, so then I planned to stay invested only with my profits from last 2 years, but again due to valuation concerns i did not found many investable co’s, so naturally I had make very focused PF, which seems to be working well in this correction as well, 30% Shemaroo ent, 10% wondrela, 10% Relaince cap, 5% Take Solution, 5% SREI infra & rest in cash… i know 30% allocation to 1 stock is crazy, but really i could not find good alternatives… these I intend to hold on until underlying fact changes… i am very closly monitoring TOP valuepickers… which helps in planning my investments & decisions…