Reliance Capital

Now a days It is very difficult to find a NBFC which has good large business under its belt ,Foreign stakes of reputed Japanese Nippon and Sumitumo ,but still quoting below book value. I assume that FII might have done proper research before paying heavy premium for their stakes.How long it can suffer due to past mistakes of misadventures in unrelated business.I assume company is now coming out of all unrelated activities and must be focusing on core Finince business.I am expecting stock to perform in medium and long run.This is my personal view for further discussion in form and is not recommendation.

 

I dont know about Reliance companies now. They are just so crappy in their customer service (I've borne the brunt of being a customer of reliance communications, ugh!). Heavy debt laden and just too much focus on extracting money out of customers with crappy service. Max, Bajaj are much better in terms of customer service and I trust them more in terms of their ethics and corporate governance. Just my thought about reliance B2C services.

 

Outperform what? The index? Then there are other already solid scrips which are likely to outperform the index.

Is it likely to be an outperformer in the NBFC pack?

 

Please write your other solid scrips which you think will outperform index in long term upto 5 to 10 years.I am always interested. To me any stock which can give NIFTY plus 5% CAGR or more are always worth looking.

 

You asking a wrong person for I dont look beyond a rolling 15-18 months..

Coming back to Reliance Capital - by the tone of message so i presume that the outperformance is vis a vis the index

 

sure. rel cap will outperform index in 5 years.

 

@kharb sir what I respectfully wanted to say that I am not very bullish on the Reliance ADAG group especially because they are poor in customer experience. Of course, that will cover Reliance Capital as well. Their major work is in B2C like mutual funds, loans, insurance, wealth management etc. and my limited point was that I am not very happy with their service and ethics towards their customers (at the group level), so therefore I am not bullish on it personally. I am reluctant to invest in any company in B2C business which, I feel, may not be great in serving their customers and harassing them. I've had better experience of customer service with Max and Bajaj. Of course, I may be wrong, but at least I am entitled to my opinion .

 

I personally like the Microfinance space. It has a lot of scope to grow, I feel. Equitas IPO has done really well. They are planning on applying for a small banking license as well. Ujjivan IPO should be interesting. Who knows, in the future, some big NBFC may buy out these smaller fishes and consolidate. SKS microfinance has already given good returns. Some food for thought.

 

True about the untapped market. But a repeat of Andhra is the lurking fear. The poll campaigns reflect a disturbing trend of appeasement. Banning liquour, tobacco. It needs just one regional party to announce waiver and we will have this on the manifesto of numerous regional parties.

 

Agreed. Thats one of the risk that can catch on to other states as well. These microfinance guys charge a heck of a lot of interest (25% if I am not wrong). There have been some studies which show that the net impact in terms of improvement of people's lives have not been great because of Microfinance. I can't confirm the veracity or the bias in the studies though. Still I feel that things may become easier with the change of govt. or some other regulatory action (ruling by HC, SC etc.) Anyways, India is a pretty big country to grow in with 70% people living in rural areas and probably need these financial assistance.

 

Smart move by Relince Capital,grossly under priced NBFC stock with good large scale business.Sumitumo and Nippon life ,both Japanese big investers have stake.Company having insurance and large mutual fund business in addition to other NBFC portfolio, now it seems is turn of Relince Capital to perform.Price to book is just 0.8,many similar NBFC are quoting at Price to book more than 3 ,so look at under valuations

 

Getting exposure to the entire Reliance group is worse than buying share of any AKRI Busienss (Cleaning or Scrap picking company) Rel Gio will not do any wonder for share holders

 

what will you suggest to do?

 

Reliance Capital advances as its Q1 net jumps 22%, Seems to give much good results in long run

 

yes valuations are attractive comparatively other NBFC s , main cause is group performance is not attractive
so stock is moving slowly ...but individually company is good

 

Added more quantity of Rel capital as Mr. Anmol Ambani son of Anil Ambani is inducted as additional director. He is Warwick University graduate and has been trained in Rel AMC. In my view company is ready for big take off and what a strategy to give credit to MR ANMOL AMBANI. INDEED A GOOD LAUNCH , A New SON Rise in Reliance Family. Wishing him, a good luck . To beat Bajaj Finance in market cap is the requirement of small share holders like me, indeed a big task for young Ambani , but his blood line may make it possible.

 

Inshallah Very difficult job but can be done by dynamic person. Let us hope for best.

I have Bajaj Finance in portfolio. It is 5 bagger for me CAPF is also good stock. Also DHFL is good stock in NBFC space.

 

I missed your both NBFC ride,as in financial sector, I was betting on pvt sector banks and housing finance companies, minted good money there led by Yes Bank approx 20 x in 8 years. Now trying to catch you in NBFC space with alternative available routes ie via Rel capital. .

 

Kharbji, I am invested in Rel Capital as well - so my views may be biased.

There was supposed to be a meeting on Sep 10th to discuss the demerger terms. But no information is available anywhere on the internet. Any info?

 

Thank you for the quick response.