Religare Enterprises Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives (6)

Ajay Kumar Shah (MD & CEO, Care Health Insurance), Ambrish Jindal (CFO, Care Health Insurance), Arjun Lamba (Executive Director, REL), Pratul Gupta (CFO, REL), Tirlockee Chauhan (EVP & CFO, Religare Broking), Vijay Kumar Goel (MD, Religare Broking)

Analysts (9)

Amit Thawani, Karina Kaur, Lala Ram, Meet Bhuva, Mukul, Naresh Naikar, Raj Lokhandwala, Sarvesh Gupta, Yash Matta

Financials & KPIs

Geographic & Segment Commentary

Care Health Insurance (Insurance Segment): Delivered 37% GWP growth with retail share improving 3% YoY; market share at 6.7% industry-wide and 24% among standalone health insurers. Retail health persistency improved with lower policy and claims levers. Investment book grew over ₹800 crores during Q1, driven by business growth and ₹150 crores rights issue. Digital footprint strong: 13.2 million app installations, 99.9% digital policy issuance, 85% of cashless claims processed within 30 minutes.

Religare Broking: Reported stable revenue with 47% brokerage contribution, 37.3% interest income, and 16% e-governance in revenue mix. Client debit book grew 58% YoY; cash segment ADTO increased from ₹334 crores to ₹375 crores. Business in repair-and-investment mode — hiring across key functions, building next-gen platforms, annual salary revisions pressured operating expenses. Net worth of REL and subsidiaries at ₹384 crores.

Religare Finvest Ltd (RFL - MSME lending): Sitting on ₹915 crores tangible net worth and ₹600+ crores cash with only ₹53 crores core SME book due to historical lending embargo and legacy cleanup. Collection efficiency stable at 98%; total income declined to ₹14.4 crores from ₹19.3 crores due to lower loan book and reduced GNPA recoveries. New CEO Karthik (joined from HDFC) building technology stack and team; business commencement targeted in next 3-4 months.

Religare Housing Finance (RHDFCL): Operating 15 branches across 8 states serving 2,800+ customers; CRAR above 121%, investment-grade ratings (BBB- from ICRA/CARE). Focused on self-employed and informal segments in semi-urban markets. Total income ₹7.4 crores with 14.6% portfolio yield; net loss of ₹5 crores in the quarter. New leadership (Pawan Gupta as MD & CEO, Ankur Jyoti as CFO) appointed; ₹250 crores additional capital committed over the next few years.

Demerger / RBI Rejection: RBI communicated non-approval of the demerger application without specifying reasons. Management is engaging with regulator to understand concerns and explore alternatives; timeline extension beyond the earlier Q1 FY28 target is a fair assessment.

Company-Specific & Strategic Commentary

Leadership Overhaul Across All Four Businesses: Completed critical leadership appointments—Karthik at RFL (technology-first, 3 decades from HDFC), Pawan Gupta at Housing Finance (ex-Motilal Housing Finance CEO), Vijay Goel at Broking (joined 6 months back), and elevation of Ajay Shah/Manish Jodeja at Care Health. Strategic hiring across key business and technology functions is a deliberate foundation-building exercise.

Capital Strength as Growth Enabler: RFL carries ₹915 crores tangible net worth with ₹600+ crores in cash; HFC has ₹180 crores net worth with ₹250 crores committed. Combined ~₹1,500-2,000 crores capital base supports management's stated ambition of ₹10,000-15,000 crore financial services book. Promoter support for Care remains strong—₹600 crores earmarked, ₹365+ crores already infused across two rights issues (Sept 2025 and June 2026).

Care Digital Transformation & Distribution: Proprietary channel contributes ~45% of GWP; multi-channel strategy with improving retail mix. 67% of active retail customers now on mobile app; average monthly doctor consultations increasing annually. Portfolio of 44 healthcare products; leverages GST tailwinds as a "land grab moment" for market share gains.

Warrant Capital Pipeline: Of the ₹1,500 crores promoter raise, ₹618 crores collected to date from September 2025 through August 2026; remaining ₹881 crores due for conversion by March 2027, ensuring steady capital availability for Care's growth.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

RBI Demerger Rejection & Alternatives

• Question: What specific concern did RBI raise, and is there a Plan B for value unlocking? (Naresh Naikar, Amit Thawani, Meet Bhuva, Lala Ram)
• Answer: The RBI letter was brief with no reasoning attached. (Arjun Lamba) Management is engaging with the regulator as the priority focus; no alternative structures under consideration currently, though a new IRDA guideline on merger of non-insurer into insurer is being evaluated. Timelines cannot be given, but delay beyond Q1 FY28 is a "fair assessment." (Pratul Gupta) RBI approval remains a precondition for any value-unlock route, including a potential Care demerger. (Arjun Lamba)

Care Combined Ratio & Ind-AS Transition

• Question: Combined ratio at 102.7% is higher than peers; math on insurance service results (negative ₹3 crores) doesn't reconcile. Also, why does Care show a loss under consolidated accounts? (Sarvesh Gupta, Mukul)
• Answer: Q1 combined ratio is elevated due to upfront claims on the corporate wellness book; last year started at 103% and ended at 101.1%, and management remains committed to 100% in 2 years. (Ajay Shah) CSIR includes non-attributable expenses (~₹66 crores) not captured in insurance service result, explaining the math gap. (Ambrish Jindal) Care took a 1-year forbearance from Ind-AS implementation (effective 1 April 2026) to stabilize technology; hence Ind-AS results don't flow into consolidated figures this year, causing the apparent loss. From next year, consolidated and standalone will align. (Ambrish Jindal)

Care Growth Drivers & Competitive Intensity

• Question: What's driving 37% growth, and how is competitive intensity impacting profitability? (Sarvesh Gupta, Raj Lokhandwala)
• Answer: Fresh business is growing faster than renewals; consumer count growing faster than premium increases, with growth primarily from Tier 2/3 geographies. This is a "land grab moment" post-GST relaxation. (Ajay Shah) Full-year guidance not given — "we intend to beat the market." (Ajay Shah) Industry-level protocol guidelines (GIC/government-led), WHO guidelines, NHCS adoption, and improved hospital-insurer trust should support profitability despite rising competition. (Ajay Shah)

RFL Capital and AUM Building

• Question: RFL has ₹915 crores net worth but only ₹53 crores AUM — why so much idle cash? What growth targets? (Amit Thawani, Meet Bhuva)
• Answer: Historical lending embargo and legacy cleanup left cash accumulating; the business is now being rebuilt — new CEO, technology stack, product launch within 3-4 months. With ₹1,500-2,000 crores capital available, management holds ambitions for a ₹10,000-15,000 crore book. (Arjun Lamba) Cash will be put to work to justify ROE. (Pratul Gupta) HFC held back because RFL under PCA/CAP couldn't access market funds for 7-8 years; this will correct with fresh capital. (Arjun Lamba)

Broking Model & Competitive Positioning

• Question: How will you compete in a cluttered broking market? (Meet Bhuva)
• Answer: Business is in "high-speed repair" mode — rebuilding technology, hiring talent. Revenue grew 7% YoY with sequential growth in Q1 too; debit book and interest income expanding. Differentiated model direction will be clear in 1-2 quarters. (Vijay Goel, Arjun Lamba, Tirlockee Chauhan)

Care Capital, Leverage & Equity Allocation

• Question: Plan for equity raised; investment leverage at 4.3x seems high; will next capital raise be a rights issue? (Yash Matta, Amit Thawani)
• Answer: ₹150 crores raised in Q1 (rights) and ₹200 crores sub-debt in Aug 2026; capital deployed per IRDAI investment norms. Solvency to be maintained at 1.7x through appropriate equity/sub-debt actions. (Ambrish Jindal) Promoters have reached in with ₹365+ crores of the ₹600 crores earmarked — REL will always fund Care, "the star in the crown." (Pratul Gupta) Leverage should reduce to ~3.7x by year-end with planned capital infusion. (Ajay Shah) Next raise most likely via rights issue; REL subscribes fully and takes additional shares, marginally increasing its stake. (Ambrish Jindal, Pratul Gupta)

Written-Off Book Recoveries

• Question: What is the recoverable pool, and can collections increase? (Sarvesh Gupta)
• Answer: Pool is roughly ₹350-400 crores of written-off secured loans with litigation/repossession complexities. Quarterly collections (₹20+ crores) expected to decline as the book dwindles; full recovery effort focused over next 2 years. (Pratul Gupta)

Warrant Conversion Status

• Question: How much remains for conversion and timeline? (Lala Ram)
• Answer: ₹618 crores collected out of ₹1,500 crores total; remaining ₹881 crores due for conversion by March 2027. (Ambrish Jindal)

Key Takeaway

Religare Enterprises delivered 26% YoY consolidated revenue growth to ₹2,358 crores in Q1 FY27 but reported a consolidated PAT loss of ₹46.98 crores due to Ind-AS transition-related reporting differences. Care Health Insurance remains the growth engine — 37% GWP growth, ₹163 crores Ind-AS PBT, and improving combined ratio (102.6%) — though solvency at 1.58x and 4.3x investment leverage require ongoing capital support, with ₹881 crores of promoter warrants converting by March 2027. Financial services is in deliberate rebuilding mode: RFL holds ₹915 crores net worth with business commencement targeted in 3-4 months and a stated ₹10,000-15,000 crore book ambition; broking delivered 47% PBT growth amid platform overhaul; HFC loss of ₹5 crores persists with new leadership and ₹250 crores committed capital. The primary overhang is RBI's rejection of the demerger scheme without stated reasons — management is engaging with the regulator, acknowledging timeline delays beyond Q1 FY28 with no alternative structure currently on the table. Watch points: demerger resolution, Care's path to ~100% combined ratio, RFL execution from near-zero book, and stability of legacy recovery flows.