Edelweiss is bullish on Reliance Capital has recommended buy rating on the stock with a target price of Rs 754 in its research report dated March 20, 2017.
Edelweiss' report on Reliance Capital
A major concern with RCAP had been its investment in non‐core assets (viz. listed plus non‐listed assets). The chairman appears firm to wind down major part of non‐core businesses by FY18. This will help efficient capital allocation to focused business areas.
RCAP’s focus on profitable growth with run down in non‐core assets will not only enhance capital efficiency but also improve core business performance. Though profitability of insurance remains under pressure, we expect improvement post consolidation. We believe potential improvement in earnings will narrow down the discount between current price and inherent fair value of core businesses. We maintain ‘BUY/SP’ with SoTP‐based TP of INR 754 (earlier INR 661, refer page 05 for details).
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