Reliance Capital To Gain After Demerger Of Housing Finance Arm, Says ICICI Securities

Reliance Capital’s stock is expected to gain over 4 percent once the company demerges its realty lending arm on September 6, according to ICICI Securities. Its shares closed at Rs 820 apiece on Monday.

The parent company will own 51 percent in Reliance Home Finance. Every share of Reliance Capital will entitle its holder to one share of the demerged firm.

Reliance Home Finance had a net worth of Rs 1,129 crore in the year through March 2017. After issuing additional shares following its demerger, the housing finance company’s net worth is expected to touch between Rs 1,400 crore and 1,500 crore, the brokerage said in a report.

The move is in line with the Anil Ambani-led group's plans to make Reliance Capital a core investment company. Its mutual fund arm Reliance Nippon Life Asset Management has already applied to the markets regulator for an initial public offer.

Earlier this year, Reliance Capital hived off its health insurance business and sold stake in the radio and television business to the Zee Group. Its general insurance arm has also filed an application for selling 25 percent stake in the open market. Reliance Capital had in February told BloombergQuint of its plans to list the home finance and commercial finance businesses.

The brokerage expects the housing finance arm to list at Rs 115-120 per share, in two to three weeks of the demerger.