Multibagger? Ventura sees Religare Enterprises surging 128% in 2 years; 5 reasons why
₹532 in 24 months, indicating a potential upside of over 128%. "Since our last initiating coverage on Religare Enterprises Ltd (REL) dated 9th Oct 2023, the company has announced various developments and shared its strategies for its business verticals. Accordingly, we are upgrading our 24-month SOTP-based price target from INR 471 per share to INR 532 per share," it said.
1) Care Health Insurance Ltd (CHIL) continued to generate strong cash flows given its prudent cost management and the industry tailwinds associated with the sector. 2) The removal of fraud status on Religare Finvest Ltd (RFL) and its anticipated exit from the restrictions imposed by the RBI is poised to facilitate the commencement of new business operations from fiscal year 2025. This will attract growth capital from investors and unlock the value of the platform.
3) Since the worst of RFL is behind, its subsidiary Religare Housing Development Finance Corp Ltd (RHDFCL) is expected to accelerate its business with the fresh credit line of ₹100 crore from REL in FY25 (can be leveraged to ₹500 crore loan book) and subsequently generate fresh capital on its own in the future. 4) Religare Broking Ltd (RBL) is likely to recover its market share with the mix of traditional and discount broking on its new digital platform. Inorganic growth for client base expansion is also on the cards.
5) Senior management has been provided with substantial ESOPs at the parent level as well as subsidiary level, which indicates that the employees will get rewarded from subsidiaries as well as good performance of the group. This leads to better employee retention at the senior level. On the back of these factors, the brokerage expects REL’s revenues to grow at a CAGR of 28.2
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