Reliance Securities: 2018 Ideas & top picks

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Diwali Muharat Picks 2017 by Reliance Sec

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Reliance Securities: Diwali Muhurat Picks

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Sell Reliance Capital Ltd - Sell between CMP & Rs.487 :: HDFC Securities

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Monetising subsidiaries as expected…. Nippon Life is raising its stake in Reliance Capital :: ICICI Securities, link

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Reliance Capital, Play on AMC, life insurance businesses… :: ICICI Securities, link

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Reliance Capital - Q1FY14 Result Update - Centrum

Strong traction in insurance businesses
RCap reported healthy set of numbers for Q1FY14 with insurance businesses
(life & general) witnessing healthy traction in premium flows. Commercial
finance saw smart NIM expansion while the company has contained balance
sheet growth. Voluntary stoppage of gold related businesses has impacted
distribution business and may hit FY14 earnings. We maintain our positive
stance on the stock led by easing of sector specific challenges for each
business.
Commercial finance: Net Interest Income grew by a robust 23% helped by
sequentially higher NIM (+100bps) though loan book was flattish YoY. From a
segmental perspective, SME was the key driver (4% YoY), while the Auto segment
saw loan book contracting by 14% YoY. Asset quality challenges persisted as GNPA
inched up higher by 50bps sequentially to 2.2% (90-day basis) and by 30% on
absolute basis QoQ. A large part of the incremental stress is coming from CV&CE
portfolio, which the company is confident, will recover shortly.
Asset management: Led by favourable response to debt schemes, the debt AUM
surged by 38% YoY and 9% QoQ. Total AUM grew by 22% YoY and 3% QoQ to
Rs1.8bn though rise in income was far steeper at 39% YoY. Expenses shot up by
44% YoY. Consequently, PBT grew by 32% YoY.
Life insurance: The life insurance business continued to face tough operating
environment though Q1FY14 saw 105% growth in new business premiums
resulting in higher market share of 10.5% (among private players). Notably, RLife
has stepped up efforts to protect its market share and penetrate Top 10 cities as is
evident by the second consecutive quarter of agent additions.
General insurance: Q1FY13 saw ticket size coming down as GWP growth of 25%
trailed 40% growth in policies issued. While the business remains profitable for the
last three quarters, PAT saw a decline of 40% QoQ; however, the combined ratio
has been maintained at ~113%. For FY14, RGEN’s share in motor pool losses is
limited at Rs650mn (vs Rs1840mn in FY13) and would represent the last obligation.
Given this, the management expects the combined ratio for FY14 to head towards
100% from 115% currently.
Broking and distribution: The performance of broking business was weak as
Q1FY14 was impacted by weakness in volumes as well as lower deliveries.
Bottomline reflects a 92% YoY drop as expenses remain sticky. Meanwhile,
distribution business saw a strong 104% growth in topline (low base effect) though
it was down 28% QoQ. Importantly, gold distribution moderated by 36% QoQ as
the company has taken the product off-market on a temporary basis.
Consequently, the distribution business registered a loss of Rs8mn for the quarter.

Reliance Capital to stop gold sales :: Business Line

RELIANCE CAPITAL Core business metrics to the fore:: Edelweiss

Reliance Capital’s (RCap) Q3FY13 PAT of INR1bn was all about core
business operations – after being volatile in the past few quarters due to
one‐offs (stake sale in core businesses, investment write‐offs and third
party motor claim reserves in general insurance). General insurance
turned profitable in Q3FY13; however, NPLs in the consumer finance
space posted a slight uptick. AMCs revenues and expenses were volatile
due to new income recognition guidelines and upfronting of marketing
expenses. Profitability of other verticals was steady. Taking cognizance of
inherent value in its life insurance and asset management businesses,
coupled with scale up in consumer financing and stability in general
insurance, we maintain ‘BUY’.
• Commercial finance: Disbursements were steady, up 16% YoY, leading to just 4.2%
YoY increase in AUMs to INR160bn. While NIMs improved 10bps to 4.2%, gross
NPLs surged 30bps QoQ to 1.9% due to two accounts. Management tagged
Q3FY13 as an exception in asset quality and guided for recoveries going forward.
• Asset management: AUMs rose 5% QoQ to INR906bn led by 12% surge in debt
funds. Revenue increased after SEBI’s new guidelines on income recognition, but
upfronting of marketing expenses on retail debt kept PBT mute (up 1% QoQ).
• Life insurance: Weighted received premium came in flat QoQ (down 9% YoY), in
line with industry trend. NBAP sustained at 15%. Persistency in check at 54%.
• General insurance: Reported positive PBT of INR156mn for the first time as it had
provided for entire FY13 third party motor claim reserves in H1FY13 itself.
Outlook and valuations: Earning visibility improves; maintain ‘BUY’
RCap’s earnings have been volatile over the past few quarters due to stake sale and
consolidation of group entities. After being in consolidation phase, the company’s core
businesses viz., AMC and commercial financing, have stabilised a tad or improved.
Moreover, third party motor claim reserves in general insurance have been booked
upfront in Q2FY13 and adequate provisioning has been made on its investments,
thereby improving earnings visibility. The drag on earnings has been securities and
distribution business. We maintain ‘BUY/SO’ with SOTP of INR548.

JBF Ind, Allahabad Bank, Reliance Capital, Mahindra Satyam, United Spirits, jindal poly films, :: Business Line

 

Reliance Capital - Q3FY13 Result Update - Centrum

Q3FY13 Result Update

Reliance Capital

Buy

Target Price: Rs585

CMP: Rs469         

Upside: 24.7%

Beats estimates on lower opex

R Cap’s Q3FY13 results came in well above our estimates (PAT at 1010mn, 68% YoY) even as topline was largely in line. The earnings beat can be traced to significantly lower operating expenses. General insurance and commercial finance business continue to report high growth trajectory along with improved profitability. We maintain our positive stance on the stock led by anticipated improvement in broader macro and easing of sector specific challenges for each business.

m  Commercial finance: Despite a 16% growth in disbursements, loan book contracted by 4% YoY partly led by higher securitization during the quarter. From a segmental perspective, Auto and SME were key drivers (11% and 5% respectively). While NIMs expanded by 10bps due to higher securitization, asset quality took a knock with GNPA increasing by 24% QoQ to 1.9% of loans.  Despite higher provisions (up 62% YoY), the bottom-line grew by a healthy 29% YoY. The management guided for stable-to-improving trend for GNPA going forward while expecting loan growth to match industry (~16% YoY).

m  Asset management: Notwithstanding a healthy 16% growth in avg AUM, the bottom-line de-grew by 17% YoY as operating expenses doubled YoY. AMFI has allowed fungibility of expenses between AMC charged and other expenses which along with higher commission expenses led to the spike in expenses. Among asset classes, debt and gold scheme AUMs grew by healthy 12% and 20% YoY respectively.

m  Life insurance: Reliance Life gained market share during the quarter (4.9% vs 4.8% QoQ) though new business premium continued to witness de-growth trend (15% in Q3FY13). Importantly, profitability for life insurance business improved dramatically with bottom-line of Rs402mn vs Rs101mn in Q3FY12 likely led by tight leash on opex as agency force came off by 6% QoQ.

m  General insurance: Performance of general insurance business was key highlight of the quarter with profitability returning after 12 quarters led by absence of burden from third party motor pool losses. For FY14, RGEN’s share in motor pool losses is limited at Rs630mn (vsRs1840mn in FY13) and would represent the last obligation. The management expects the profitability in general insurance business to sustain in future.

m  Broking and distribution: The performance of broking and distribution business was stable (flattish PBT QoQ) primarily due to continued investment in expansion of footprint for the distribution business.

m  Maintain Buy: R Cap’s earnings have been volatile over the past few quarters due to gains from stake sale and consolidation of group entities. Post the consolidation phase, the core businesses (AMC, commercial financing) have seen a reasonable stability with general insurance turning profitable in Q3FY13. In the light of the substantial inherent value in life insurance and asset management businesses, ramp up in consumer financing and stability in general insurance business, we maintain Buy with SOTP based fair value estimate of Rs585 per share.

Thanks & Regards, 

-- 

Reliance Capital Buy Target Price: Rs585:: Centrum

Reliance Capital

Buy

Target Price: Rs585

CMP: Rs436         

Upside: 29%

Phoenix rising again

Difficult business environment for equity linked businesses; sweeping regulatory changes in insurance (life & non-life) and a generally weak macro have led to significant erosion in return ratios of RCAP. However, the tide is gradually turning as individual business segments overcome sector specific challenges and macro is on the mend leading to improved outlook for capital market linked businesses. Current market price disregards long term value seen by strategic investors and under-appreciates a potent banking platform in making. We initiate coverage with a Strong Buy recommendation with an upside of ~30%.

Head of Equities, reliance MF Sunil Singhania's views on Indian equity markets

Reliance Vision Fund - Switch ::Business Line

Reliance Capital :Talks about FDI in insurance spur stock… : ICICI Securities

Talks about FDI in insurance spur stock…
Reliance Capital remains one of the key beneficiaries of insurance and MF
sector reforms. The expectation of FDI in insurance being raised up to
49% from 26% has led to a sharp rally in the stock. The Cabinet meeting
on September 25 is likely to discuss the same and with the government’s
fast track reforms, there is a probability of the same getting approved in
principle. Recently, the Japanese giant, Nippon Life bought a 26% stake in
Reliance Life. With the FDI limit opening, we believe along with existing
partners, many foreign players will be interested to take smaller stakes.
Insurance IPOs may also be successful. Foreign funds can come to this
sector much faster than in other sectors where FDI proposals have been
approved in the recent past.
Even allowing the Rajiv Gandhi Equity scheme for MFs remains a positive
for RCap being one of the top 2 AMCs in the country.
Reliance Capital is gradually reducing the non core investment book
exposure and is expected to utilise capital gains to offset loss on exiting a
large portion of listed investments. RoA is strong at ~1.7%. However,
RoE is in high single digits mainly due to large net worth (| 3800 crore
added due to life revaluation). Its consolidated PBT is set to increase.
RCap has remained our conviction buy among NBFCs for long.
With our initial SOTP target price of | 381 based on FY13E being
achieved, as indicated earlier also, rolling all valuations to FY14 can offer
further upsides up to | 435. We recommend investors HOLD the stock.
http://content.icicidirect.com/mailimages/ICICIdirect_RelianceCapital_QuickComment.pdf

Reliance RSF Balanced: INVEST ::Business Line

Glenmark Pharmaceuticals:Napo arbitration in favor of Glenmark : Reliance Sec

Napo arbitration in favor of Glenmark
Key points
 Event: Glenmark has received a favorable ruling regarding anti-diarrhea drug
Crofelemer against Napo Pharma (arbitration filed in December 2011) by an
international arbitrator. It has received exclusive rights to develop, commercialize
and distribute Crofelemer in 140 emerging countries for the treatment of diarrheal
diseases. The arbitrator has also ruled that Glenmark has 2 years to file for
regulatory approvals in 140 countries post the approval of Crofelemer in India.

Reliance Equity Opportunities: Invest: Business Line,

Reliance Vision: Timely moves may boost performance :: Business Line

Reliance Small Cap: Deploying cash back in equities ::Business Line