Sep 29, 2017

Reliance Home Finance: Be and Make

Reliance Home Finance, carved out of Anil Ambani-promoted Reliance Capital Ltd and this mid-sized housing finance is 51 percent owned by Reliance Capital, after completing demerger from the Ambani’s financial services Rel Capital.
Reliance Home Finance had assets under management worth Rs 13,022 crore as of June 30 2017. Home loans and affordable housing loans contributed 35 percent and 19 percent of its portfolio, respectively, while riskier segments like loan against property and construction loans accounted for 22 percent and 24 percent. About 78 percent of its loans are disbursed to self employed individuals and the rest to the salaried.
The company has seen its assets under management grow at over 40 percent in four years to March, according to an August investor presentation. It targets a loan book of Rs 50,000 crore in the next three to five years.
Shareholding pattern:
While net interest margins have improved sequentially in the year to March, they have come down from 4 percent-plus levels in the last few financial years on rising pressure on yields and increased lending to low-yield segments and affordable housing. It’s comparable to its peers, with only Indiabulls Housing Finance Ltd. and Repco Home Finance Ltd. having margins higher than 4 percent. Gross bad loans – not repaid for 90 days – stood at 0.8 percent of its total advances. Based on analysts’ calculations of Rs 40 book value per share, a debut at Rs 120-137 will value the stock at 3-4 times its book value for the past 12 months. This would imply a market capitalisation of close to Rs 6,000 crore.
At the CMP the stock is trading at Rs.93/- and at market cap of 4500cr gives a wonderful opportunity to the long term investors.
Download the report in pdf: Reliance Home Finance_RHFL_Beandmake
Key negatives of the company:
1.      Reputation and fairness of the ADAG group
2.      Stock is under BE group i.e., trade to trade group hence no immediate price action can be seen.

With thanks
Be and make

Note: The above article is not a research report but it is a information as available on public domain and it should not be treated as a research report. It is just a study which I/we observed and recording them as a dairy of mine/us.

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Disclosure: It is safe to assume that i/we might have positions in my/our portfolio and hence my/our point of view can be biased. Readers should consult their financial advisory before any investments.

1 comment:

nitin singh said...

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