Citigroup's 'sell' recommendation on Reliance Capital
Citigroup has a ‘sell’ recommendation on Reliance Capital with a target price of Rs 500. Reliance Capital has corrected sharply since September ’08, and is now close to its bare bones valuation.
RESEARCH: CITIGROUP
RATING: SELL
CMP: Rs 556
Citigroup has a ���sell��� recommendation on Reliance Capital with a target price of Rs 500. Reliance Capital has corrected sharply since September ���08, and is now close to its bare bones valuation.
But Citigroup believes its businesses will continue to face challenges due to: a) uncertainty in the capital market; b) tight funding environment; and c) slower economic and savings growth. It values the life insurance business at Rs 294; AMC at Rs 124; consumer finance at Rs 42; non-life insurance at Rs 21 and broking at Rs 22, at 10x one-year forward EPS.
Also, it does not attribute any value to unrealised portfolio gains due to sharp correction in the capital market. Key pressure points are: a) earnings linked to the equity market; b) non-banking platform; c) growth in life insurance and consumer finance can slow meaningfully ; and d) vulnerability of consumer finance asset quality. An easing of any/some of these concerns can lead to a change in the view on the stock.
RATING: SELL
CMP: Rs 556
Citigroup has a ���sell��� recommendation on Reliance Capital with a target price of Rs 500. Reliance Capital has corrected sharply since September ���08, and is now close to its bare bones valuation.
But Citigroup believes its businesses will continue to face challenges due to: a) uncertainty in the capital market; b) tight funding environment; and c) slower economic and savings growth. It values the life insurance business at Rs 294; AMC at Rs 124; consumer finance at Rs 42; non-life insurance at Rs 21 and broking at Rs 22, at 10x one-year forward EPS.
Also, it does not attribute any value to unrealised portfolio gains due to sharp correction in the capital market. Key pressure points are: a) earnings linked to the equity market; b) non-banking platform; c) growth in life insurance and consumer finance can slow meaningfully ; and d) vulnerability of consumer finance asset quality. An easing of any/some of these concerns can lead to a change in the view on the stock.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
