Business Analysis 1: Religare Enterprises
Religare Enterprises, another turnaround story on the block
Religare Enterprises, another turnaround story on the block. I came to know about this stock through NSE 52-week high/low. Till then I had been following the stock. After I gave a brief study, I kept it under my radar. Let's see what's being cooked inside.
A. The company paid almost all the dues to its lenders so that it doesn't have to pay too much of interest cost like it used to pay. So it is expected the net will increase going forward. It's now a debt free company
B. Rashmi Saluja is at the helm, the current chairperson of the company. I was first impressed by her educational qualifications. She has MBBS, LLB, MBA, and many more. She is an entrepreneur also. She brought the company from darkness to light
C. The company spreads across various segments like health insurance, lending, broking, housing finance, and others. And every sector is growing leaps and bounds, specifically their health insurance business. The future prospects for every sector looks very bright
D. Market value is around 8000 crores INR
E. Some prominent investors also gave me some confidence
F. After a few years of negative earings, the company came into positive trajectory
G. It's a turnaround story, a special situation. The company is going through restructuring period
H. The stock is still down 20-25% from 52-week high but the revenue is constantly growing
I. Burman family has been constantly helping the company to sail through the difficult phases
Later, found more
J. Religare is preparing to launch the IPO of its health insurance business, Care Health Insurance and IPO/demerger of its broking business as well
K. Market cap of Religare around 8k CR INR and holding value of its insurance subsidiary, Care Health insurance is around 10k CR INR in the OTC market. The business is growing by leaps and bounds
L. Health insurance penetration in India is too low. Still, 40 cr people don't have health insurance. Care is one of the largest health insurers in India with 22% market share in the health insurance industry
M. Religare Enterprises
Revenue Q2 2025 - 1952 cr, FY24 - 6235 cr Growing at 25-30%
Investment - 7584 CR INR (Sept 24)
Market cap of Religare - (8000 CR)
Liquidation value - 2450 CR excluding Non-controlling part, Book value- 74.2 excluding Non-controlling part
Operating cash flow 2024 (1500 CR INR),
Free cash flow 2024 (152 CR INR)
Star Health as of Nov 2024
Trading at around 2x revenue multiples abd growing around 16-17%
Investment - 16431 cr (Sept 2024)
Market cap - 27454 cr, Revenue- 14022 cr FY24, Q2 2025 - 4058 cr
Book value - 119 Liquidation value- 7000 CR INR approx (Sept 2024)
Operating cash flow - 1310 CR INR (2024),
Free cash flow - 1133 CR INR (2024)
Rakesh jhunjhunwala bought star at RS 155 between March 2019-Nov 2019 at a valuation of around 7000 CR INR approx
Niva Bupa Health Insurance, the 4th largest by market share
The company is seeking a valuation of around 13000 cr and growing around 40%
Revenue - 4118 cr FY24
Niva Bupa has around 9% market share
The company projects 25-30% growth over the next 24-28 months
N. So, being the second largest standalone health insurance company, it is trading at mere valuation below the third largest company
O. On the other hand, Broking business is doing very well, growing at 20-25%. The industry also looks fantastic
P. The other two businesses such as lending and housing finance haven't yet started in a full fledged way
Q. Only One analyst is covering the business (Ventura Securities)
R. There was not much institutional holding
S. DII constantly increasing its bet, specifically Motilal Oswal
Risks
A. Takeover battle between Burman family and independent directors has been going on for sometime
B. Some issues are still there related to previous dues and RBI cap on RFL
C. Sudden slowdown in the revenue
Conclusion
This is not a typical holding company where you will get 50%, 60% discount to its book value. All the revenues are going to the parent company. So, 8k cr valuation for the company that has 4 main businesses is not justifiable right now. Two businesses are doing fantastically well. Two other businesses haven't yet started. As soon as they start, revenue should increase massively. The business has been constantly growing at 25-30% CAGR. It should trade around 10-12k cr valuation right now.
Health insurance business has a long long runway in India if I compare it to the American market.
Also, we should keep in mind the tussle between the Burman family's takeover and the current management has been going on for a long time. That might have affected the valuation.
The business is doing fantastically well. So, even if the management changes, it has already made its base. Now, what we need to do is to track the performance of the business going further, be it by the new management or the existing one.
If this particular issue is resolved, then I hope the company has a long runway. There are a lot of positive triggers to unfold further. The stock will get re-rated.
Thanks
Rabi
Disclaimer: I'm not SEBI registered. This content is for educational purposes. Do your own diligence.
Nice write up, keep it up