ADAG Group - Investment opportunity or not?


(Mukesh Amar) #21

Pardon my lingo but there is nothing to get so touchy about what I referred to… I assume adag guys have much better options than suing ppl for speaking against them… I also assume you are not the guy who bot rcom @800 odd levels and made your capital zero by the so called bad decisions that you are referring to… Even after that if you are so hurt… I genuinely apologize…


(Bhaskar Jain) #22

I am not hurt so you need not apologize to me. I am just saying we should be very careful in using technical well defined legal terminology and should not use it casually/loosely…
This thread is about ADAG group stocks going forward and everyone knows about their past.


(manish) #23

No one is saying that ADAG group companies are good, in fact the reverse is true.

But at a particular price even the bad companies can be good investment. After all people do make money from buying distressed assets, though its a very risky affair.

I am particularly interested in Reliance Capital.
2 of their businesses - Reliance Home finance (subsidiary with 51%stake) and Reliance Nippon asset mgmt ( associate company with 42% stake) are doing very well.
RNAM has a good track record, old company and is presently placed in an attractive sector with lot of inflows coming into MF segment and the economy poised to grow.
RHFL is growing at a good pace 40%+ and has CAR of 21% as of Sept 2017 end.
Their other businesses profitability is also improving.

So can anyone highlight any 1 business of RCAP which is not doing well or unlikely to do well in future.

RISKS
other than the risks associated with NBFC’s and finance segment, the biggest risk here is ANIL AMBANI.
And the probability that he can divert funds into other junk companies of the group like RCOM.

In RNAM , Nippon life of Japan is equal partner and I think they are partner in the insurance business as well. So Anil Ambani will not be able to divert funds from these subsidiaries for sure.
Also, I believe Anil Ambani is incompetent but not fraud. In the last Concall, the mgmt has indicated that their exposure to RCOM is 1500 cr ( as of RCOM current share prices) and mostly 1000 cr to RCOM tower business and they don’t intend to increase exposure. Also they have mentioned that they intend to liquidate their stake in non-core assets ( much of it in group companies) by Mar 2019 and significant part by Mar 2018. THIS NEEDS TO BE MONITORED. The assets are worth 15000 cr and would make the standalone entity debt free. That itself means saving of almost about 1500 cr in interest payments approx.

Anyone has any idea how is RELIANCE MEDIA WORKS performing and its financial position.

Will be happy if someone can point other risks / loopholes in RCAP


(Jiten Parmar) #24

Good points. Also, understand, that Reliance Commercial Finance (now rebranded as Reliance Money) is headed by Devang Mody and has a 16000 cr book. And expected to do very well.

Also, I had asked specifically about prop book (investments, which is 15000 cr) and all liabilities including guarantees to Rcom are limited to 1500 cr. I have reasonable confidence in new team.

Risk of Anil Ambani always remains, but I am of the view, that is probably the best company in his fold, and he would want that to pass on to his next generation. Also, feedback on Anmol is positive.

Let’s see what future has in store.


(Vivek Chaturvedi) #25

Let’s see if the company actually walks the talk.


(Mukesh Amar) #26

Hi bhaskar, thanks for pointing it out. I am a very general observer, a business person, not an analyst and certainly not a technical guy. Not to stretch much to the non core issues here if you go through the article Singhvi has rightly pointed out that bulk of the npa’s are from three big names, if you see if not technically but in hindsight it is very evident that all the three names acted as willful defaulters only. The other day I read an article that first tesla in India is owned by Prashant Ruia (of Essar). So despite having the capacity they don’t have the intent to pay back their loans. I understand the intricacies of discussing the same at a public forum and also conclude that my using the word “willful defaulter” is an exaggeration of my understanding of the facts.
Hi Manish, you have rightly pointed out that both RNAM and RHFL are good business that stand out in ADAG group, probably that was the reason I was invested in RCAP since a year or so, I was expecting both business to demerge from RCAP but RHFL was demerged and RNAM was not. Now if we go by the logic of buying good businesses in ADAG group I think RCAP doesn’t fit the case now as it owns only 50% of RNAM out of which you also need to reduce 30% as holding co. discount. Rest you can buy RHFL & RNAM individually. I am always open in admitting and rectifying flaws in my understanding.
Thx & rgds, Mukesh.


(shahparag) #27

http://www.bseindia.com/xml-data/corpfiling/AttachLive/7f483fe1-7fe7-423b-bb8d-0b95c1966478.pdf

if happens then r infra will become debt free on stand alone basis


(shahparag) #28

in last 2-3 days many fundamentally probably debt reduction possibilities have increased at ADAG GROUP , particularly at R INFRA. , mkt hs started taking it in to consideration and rel infra being such a underperformer , technically can surprise everyone on upside also in a particular time frame like these on back of such news .


(Jiten Parmar) #29

One major risk over with acquittal in 2G case. Even RCom issues looks like will get resolved. Stock has given very good bounceback.


(Jose) #30

Has anyone got an idea as to which all FII s are invested in reliance cap?? And in which quarters…Rcap does look cheap and almost all adag companies have been phenomenal wealth destroyers ,he may very well like to keep atleast one company .all in all Rcap looks good


(Mukesh Amar) #31

Down but not out.


(Jose) #32

Rcom just gave great bounceback ,can we still see it as a good bet for the next 6 months, can we have see more positive news flowing. A PE investor coming in could be a great news,but could that be possible?


(shahparag) #33

as of now , positive in rcom can be used for building conviction on r infra or rcap , out of which r cap is defintely worth looking at …


(shahparag) #34

hi all ,

i initiated this forum on 27th nov when adag stock were at rcom - 13, rcap at 450 & rinfra at 450 around & sentiment indicator was like ADAG GROUP ON THE VERGE OF DEFAULT !!!
in last 30 days ,all have bounced back reasonably from 20% to 80% on back of debt reduction plan at rcom & rinfra . however is everything positive ??? no , not yet , we need to see how actually cash flow is available to company and when interest burden is decreasing .

looking at rcap , it has a reasonably good business model , leadership position in some segment , well established network .
the problem i think rcap facing is ADAG BRAND & RCOM DEBT ( ARD 1500 CR ) ON BOOKS , which i think can be reasonably assume that it is over now .

however next interesthing is to see that how it react price wise in next correction of mkt of any nature , which will give more idea about base building of stock.

price movement at certain range are always very important to watch out for , which sometime gives important insight about fundamental change in company - group - industry - market !!!


(Jiten Parmar) #35

Rel Cap makes a superb comeback. This was a pure contra bet (and a big bet - largest pf holding).


(shahparag) #36

sometime valuation gap work much more faster in favour of investor then basic warren buffet principles …these are special situation ,if one can spot it …best return are possible …


(shahparag) #37

has anyone tried to do /available from some source valuation comparision of reliance infra following business with it’s comparable peers ??

  1. power
  2. road assets
  3. defence business
  4. epc business

will be interesting proposition i guess looking at market capitalisation of around 13000 cr as of now .


(sarangg) #38

Given the overhang of RCom debt gone due to deal with Jio, I think Reliance Capital could rescale old heights of 900, and even then be cheaper than 1.5x P/BV. Also, Devang Mody heading Reliance Capital’s commercial finance/NBFC business is a big positive, given what he has achieved in Bajaj Finance. Management has received significant ESOPs, so their interests are aligned with minority shareholders.

Disc: Invested, second largest position in PF now :slight_smile:


(Manohar T. Patil) #39

Agree! What is your acquisition price if I may ask pls.


(shahparag) #40

does anyone have idea about now what rcom will left with ??
balancesheet size , businesses , sales volume , business wise profitability ??

study /knowledge sharing of any nature will help