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