Feb 16, 2017 04:39 PM IST | Source: Moneycontrol.com

Buy Reliance Capital; target of Rs 540: ICICI Direct

ICICI Direct is bullish on Reliance Capital has recommended buy rating on the stock with a target price of Rs 540 in its research report dated February 14, 2017.

Buy Reliance Capital; target of Rs 540: ICICI Direct

ICICI Direct's research report on Reliance Capital

PAT came in at Rs 209 crore, a dip of 11% YoY and 17% QoQ vs. our estimate of Rs 246 crore. Q2FY17 had one-off capital gains booked of Rs 50-60 crore and higher provision in general insurance (GI) at Rs 74 crore. With these one-offs factored in, topline declined 19% QoQ to Rs 3963 crore.

Outlook

Adjusted RoE is expected to gradually move to double digits in two or three years. The stock is trading at 0.8x for FY18E forward P/ABV. We upgrade rating from HOLD to BUY, maintaining our target price at Rs 540/share on SoTP basis. We have built in 15% holding company discount.

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