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Entry Price

420.00

Target

525.00

Recommend Date

12-09-2018

Return

25.0 %
BUY

Date : 12-09-2018

Ind-As impacts earnings, networth…  Reliance Capital reported slightly disappointing results as even with operational businesses being good, the pressure of related group accounts seems to have led to significantly higher ECL provisions (| 442 crore) and MTM on fair value of investments (| 216) crore in last Q1. Networth adjustment also appears to be on the higher side at ~| 5000-6000 crore at least from FY18 base of |16600 crore. Though networth erosion is there led by expected credit loss provisions on group exposures, the market was anyways discounting those exposures from the overall valuation of the company  It reported Q1FY19 PAT of | 271 crore vs. loss of | 378 crore in Q1FY18 (adjusted for Ind-As in both quarters). Total revenue came in line with estimate at | 4641 crore, up 4% YoY  Funds received from IPO of the gaming company internationally (| 1100 crore) & sale of Yatra stake (| 150 crore) led to debt reduction  Led by Ind-As adjustment, higher MTM in other income and ESOP provisions impacted PAT for Reliance AMC (listed). Topline and PAT grew 12% and 2% YoY to | 424 crore and | 110 crore, respectively. With markets moderating, Q1FY19 MF AUM grew 7% YoY to | 240400 crore vs. surge of 22% YoY in Q4. Its SIP book has also been growing with retail AUM now at | 78000 crore