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Book Profits in Reliance Capital Limited – ISEC

October 12, 2007

ICICI has recommended all its investors to Book Profits in Reliance Capital with a target price of Rs 1,500, potential downside of 20%.

CardBhai writes to us that, Reliance Capital will kick off its Consumer Finance Business next week offering Personal Car, Home, Property and all different kinds of loans.

Reliance Capital has retained its leadership position in AMC which constitutes Rs 295 per share to Reliance Capital’s valuation. Life insurance premium has increased by 120% to Rs 474 crore for period up to August 2007.General insurance premium grew 195% to Rs 807 crore during the same period.

Sum of Parts Valuation of Reliance Capital,

  • Reliance Capital (Standalone) 308
  • Reliance General Insurance 83
  • Reliance Capital Asset Management 295
  • Reliance Life Insurance 545
  • Reliance Money 56
  • Unrealised gains of quoted equity book at 10% discount 189
  • Adlabs Films value held in Reliance Land at 10% discount 24

Total Value is Rs 1,500. The company is likely to report an EPS of Rs 31 for FY08 and Rs 37 for FY09. Valuations look stretched. Book Partial profits at current levels.

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