@jaybadiyani Securitization is pooling part of the loan book and on selling to third parties maybe for a fees. Such loans will not be in the books of reliance home finance which will enable the company to leverage higher.
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I don think that any shares were sold in the IPO. All the owners of Reliance Capital got 1 share each of Reliance home. So shares of Reliance home became a tradeable asset. The company can use stock markets to raise equity when required.
And now equity capital is 485 cr.
Notes on Q4FY18 Concall:
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As pointed in the post by @SlownSteady cost/sales reduced from 55% to 38%. They see it going down to maybe ~35% in the near future (1 year). Due to the high growth model, they will not be able to bring it down more that easily. Average cost/sales for others is roughly between 20-25%.
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The Co intends to maintain growth levels through network expansion. Target for next 1-2 years is 75 offices in 200+ locations. More emphasis on Digital portal since thatās where the majority of sales will flow in from.
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Currently house loans contribute to 51% of the AUM (of which Affordable housing is 21%). They plan to increase it to 55%.
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On Construction Finance: They undertake projects that are undergoing brownfield expansion and wherein the project has reached a certain stage already. The average ticket size is around 10-11 Cr. Due to this, they are not involved with very big builders, but the ones they choose have a good past record (5 lac sq feet projects delivered in the past). This provides good safety.
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NPA for construction finance and housing are both similar and in the 0.8-0.9% range.
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Original plan was to hit AUM of 50,000 Cr by December 2020 but due to demonetization etc they have shifted this to March 2021. In order to achieve this, they will have to grow the AUM by around 45% CAGR.
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On Affordable Housing Segment: This includes home loans of up to 35 lacs. The perception is that self employed category, which they mostly cater to is high risk, but they insist that they have an expertise in evaluating candidates. In addition, all the people have credit histories and CIBIL scores.
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On the front of being ahead of the competition and growing aggressively, according to me they did not provide any substantial reason. They mentioned that other players focus on specific geographical areas, donāt have large distribution footprints whereas they are ācloserā to the clients.
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70-80% of Construction financing is in top 5 cities.
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They are currently doing 1500 unique disbursements every month. Not sure how they stack up against competition in this regard.
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They are adequately capitalized and do not see any funding requirement in the near future.
Link to concall: https://www.youtube.com/watch?v=YE3yUIFw3y8
Disc: Not invested. Observing.
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Very well said rajput_delhi!. Have been a victim of some of the biases mentioned in your post, esp. lower current valuation and an outrageous target put forth by the management.
Even at 59, the stock trades at 15x FY18 PE.Even Reliance Capital trades at a lower valuation compared to this. Rel Cap is fundamentally not a bad stock (Most of its business are in the TOP 5 category), but has been significantly discounted by the market for reasons well known.
At a 12x to 14x Q4 EPS run-rate we are looking at a range of 48 to 56, not very far from the current levels. However, even if we discount the Rs 50K AUM target by 25% -I know I am getting into an anchoring bias 
here, at 37.5K AUM, with some dilution, you are looking at a EPS of Rs. 9-10. With a PE range of 12-15 that transpires to a stock price of 120-150, an return of 25% - 3.5%.
Wait and watch before I average
Disc: Invested some at 71 levels
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Hello Folks, Given the correction in other stocks in past few weeks & not much correction in RHFL, does the stock still appear to be available at attractive valuation with enough margin of safety against the comparable peers?
Looks like there is some discrepancy in the ticket size numbers they are reporting.
Affordable Housing
Nov 2017 - 28 Lacs - http://www.reliancecapital.co.in/pdf/Conference-call-transcript-for-Q2-FY-2018.pdf
Feb 2018 - 13 Lacs - https://www.icra.in/Rationale/ShowRationaleReport/?Id=67074
Drop in ticket size by more than half in 3-4 months.
Home loans
Oct 2008 - 36 Lacs - https://www.domain-b.com/financials/companies/R/Reliance_capital_ltd/2008-09q2200811425733661.pdf
Feb 2010 - 50 Lacs - http://www.reliancecapital.co.in/pdf/Reliance_CapitalQ3FY10_results_Conference_call-Transcript.pdf
Nov 2010 - 75 Lacs - http://www.reliancecapital.co.in/pdf/RelianceCapital_Q2FY11_Conference_call-Transcript.pdf
Feb 2018 - 60 Lacs - https://www.icra.in/Rationale/ShowRationaleReport/?Id=67074
From a ticket size of 75 Lacs in 2010 to 60 Lacs in 2018?
Construction Finance (Crs) / Developer finance
Mar 2015 - 20 Crs - http://www.reliancecapital.co.in/pdf/RCL-financial_presentation_FY_2014-15.pdf
Oct 2016 - 10 Crs - http://www.reliancecapital.co.in/pdf/Conference-call-transcript-for-Q2-FY-2017.pdf
Feb 2017 - 5 Crs - http://www.reliancecapital.co.in/pdf/Conference-call-transcript-for-Q3-FY-2017.pdf
How can there be so much of a variance in ticket sizes? Maybe I am overlooking something?
Is somebody attending the AGM on 12th? If yes then I have some questions we can ask mgmtā¦
HOT News: 25% Stake in RHFLā¦Great race between international investorsā¦
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Poor Q1 Results:
- Sales down by 8.6% QoQ, up by 4.8% YoY.
- Net Profit down by 15.7% QoQ, up by 41.1% YoY.
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=2852762f-75fe-48ec-9d80-ea6555bc4f66
Q1 poor results dosent really matterā¦
25% stake for a valuation of 1500-2000cr works out to 124-165 per share. [485cr is the total share capital @ rs.10 per share face value]
If the deal materialize, then per share market price would also respond positively.
Why would they pick up stake at more than 2x market cap? Any reason or explanation
What happened to stake sale of RHFL
Anyone have access to this article, can share summary? https://www.business-standard.com/article/opinion/what-next-reliance-home-finance-120011900808_1.html.
First of all I donāt understand why folks are still interested in an outright fraud case. This is another lesson for book value gazers in the financial world apart from yes bank. Still some of the headline from this article.
- 60% of loan book is to the group companies and the company accepts upfront to avoid being called as a fraud.
- last para of this article āRHFL is not a default caused by liquidity tightness or lack of funds available to a housing finance company. It could have been avoided had these loans to group companies not been given. Period.ā
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Relianceās Jio Cloud PC: Unpacking the virtual āgame-changerā that could reduce digital divide
Jio Cloud PC is a service that will let users pay to bring the power of a personal computer or even multiple PCs to Indian homes and businesses. Reliance says it does not require any upfront investment and does away with the need for any upgrading