ADAG Group - Investment opportunity or not?

(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,

(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 …

(shahparag) #69

recent market sell off has bring prices again to test the bottom for adag group …however, the volatility is not for the weak hearted for sure !!!
however’ rel capital seems to have again at a good level where risk reward ratio seems favourable …

(gagandeep) #70

(Ashwini) #71

@jitenp I believe Reliance general insurance is 100% owned by Reliance Capital.

Also how did you get the value of investments at 14,000 Cr. As per management concall they have been mentioning 10,000 cr investment book but no details have been given.


(Jiten Parmar) #72

This 14000 cr number has been given by management in Q2 concall.

(Rohit Ojha) #73

Reliance capital has again taken support in the 405-410 range. Looks unlikely that it would breach these levels.