Reliance Home Finance Likely To List At Rs 115-137
Reliance Home Finance, carved out of Anil Ambani-promoted Reliance Capital Ltd., will list on exchanges on Friday.
The mid-sized housing finance is 51 percent owned by Reliance Capital, after completing demerger from the Ambani’s financial services arm on September 6.
Assets Under Management
Reliance Home Finance had assets under management worth Rs 13,022 crore as of June 30. Home loans and affordable housing loans contributed 35 percent and 19 percent of its portfolio, respectively, while riskier segments like loan against property and construction loans accounted for 22 percent and 24 percent.
About 78 percent of its loans are disbursed to self-employed individuals and the rest to the salaried.
The company has seen its assets under management grow at over 40 percent in four years to March, according to an August investor presentation. It targets a loan book of Rs 50,000 crore in the next three to five years.
While net interest margins have improved sequentially in the year to March, they have come down from 4 percent-plus levels in the last few financial years on rising pressure on yields and increased lending to low-yield segments and affordable housing. It’s comparable to its peers, with only Indiabulls Housing Finance Ltd. and Repco Home Finance Ltd. having margins higher than 4 percent.
Gross bad loans – not repaid for 90 days – stood at 0.8 percent of its total advances.
Net interest income fell in the year to March at Rs 217 crore, while its net profit almost doubled to Rs 170 crore.
Listing Math And Valuations
Brokerages expect Reliance Housing Finance to list at Rs 115-137 apiece.
- ICICI Securities: Rs 115-120.
- Axis Capital: Rs 124.
- Edelweiss: Rs 137.
This would imply a market capitalisation of close to Rs 6,000 crore.
Based on analysts’ calculations of Rs 40 book value per share, a debut at Rs 120-137 will value the stock at 3-4 times its book value for the past 12 months.