If the bulls keep on roaring, then we might see Rel Cap trading at around 3700-3900
Best pick for long term money
Price Now : 1400 (28th March 2008)
52 Week High :2925 (10 Jan 2008)
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Rel AMC
Fy 08 AUM of 91000crs
Fy 09 AUM of 131040 crs
Fy 10 AUM of 188698crs (assuming 44% CAGR )
At a valuation multiple of 7% of AUM one year forward, Rel AMC is valued at 12548 crs (95% stake) = 510/share
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Life Insurance
Assuming FYP growth of 200%, 100% and 80% in 08,09 and 10 , NBAP margins of 17% and a NBAP multiple of 28, Rel Life Insurance is valued at 1399/share for 93% stake. I have assumed that the stake sale will happen at a multiple of 28.
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General Insurance
Assuming a Combined ratio of 98% in Fy 10, Rel General Insurance is valued at 10,000 crs resulting into 406/share. Retail share is expected to scale up to 75-85% from 70% currently so RGI will be less affected from the de-tariffing.
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Broking & Distribution
RM expects revenues from the broking business to make up about 50% of total revenues. Income from third party mutual fund distribution is expected at around 30–35% of total revenues, with revenues from money transfer, sale of gold coins, etc, comprising the balance of 10–15%. RM is gaining good traction in its mutual fund distribution business and is already the top three distributor for UTI and SBI mutual funds. Management is targeting to have a 500,000 customer base by FY3/08 and 1m by FY09, with monthly revenue per customer of Rs350–400 in FY09.
Assuming a PAT of 400crs and a One year forward PE multiple of 25 (peers are trading at forward PE multiple of 40), Rel Money is valued at 10,000 crs which is equal to 406/share.
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Consumer Finance
Disbursements of 18000 crs by Fy10 and a P/BV of 2.25 will value RCF at 855/share. Interest rates are headed down and Future Capital expected listing market cap of 8000 crs makes me believe that it can trade at a BV of 2.25.
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Listed Investments
Valued at 8000 crs = 325/share
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Unlisted Investments
Reliance Technology Ventures Ltd has invested/advised in over $1bn deals. No brokerage reports have taken this into account.
Reliance Technology Ventures Ltd (RTVL) has made an investment in the US. The corporate venture capital arm of the Reliance ADA Group has led a series B round investment of an undisclosed amount in E-Band Communications Corporation (EBCC), a US -based company that makes ultra-high capacity wireless communications systems for the 70/80 GHz E-band spectrum. The funding round includes existing investors ADC, Investec, Hercules Technology Growth Capital, and an unnamed US telecom company
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Total = 3900/share based on FY10E
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