Reliance Life Insurance gets RBI approval, but doesn't not help Reliance Capital

Stocks

oi-Shoaib

By Shoaib Md

Published: Friday, September 30, 2011, 13:34 [IST]

Reliance Capital is still under selling pressure despite the Reserve Bank of India's (RBI) approval for 26% stake sale of Reliance Life Insurance, a part of the Reliance Capital.

According to the deal between the Reliance Life Insurance and the Nippon Life Insurance, Nippon will pay Rs 3,062 for 26% stake in Reliance Life Insurance.

The deal had recieved approval in principle from the Insurance Regulatory Development Authority (IRDA) regarding the proposed stake sale. With the RBI clearance, IRDA will grant its final approval for completion of the transaction, Reliance Capital said in a filing to the Bombay Stock Exchange.

Sam Ghosh CEO Reliance Capital said, "We are delighted to receive the RBI approval, bringing us closer to concluding this transaction very shortly."

"This is great news as we move closer to completing the transaction," Nippon Life Insurance President Yoshinobu Tsutsui said.

This transaction has put the valuation of Reliance Life Insurance at around Rs 11,500 crore.

Nippon Life is the seventh largest life insurer in the world with a legacy of 122-years. It is one of the leading private life insurer in Asia and Japan.

VIEW: Trading at a PE of 18.3 times and the price to cash flow of 17.6 times. Also its price to book value ratio at 2.3 times makes this stock fairly expensive.

At technical analysis also at a glance the stock is on a downward descend. Let it start moving up and then trade with the momentum

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