The Burman family, owners of Dabur India Ltd., plans to establish its presence in financial services through its open offer to Religare Enterprises Ltd., a holding company with four business verticals: insurance, financing, broking, and e-governance.
Burman Group companies M.B. Finmart Pvt., Puran Associates Pvt., VIC Enterprises Pvt., and Milky Investment & Trading Co. announced an open offer to acquire a 26% stake in Religare Enterprises on Monday.
The four companies acquired 5.27% more, taking the Burman family's holding in the financial services firm above 25%. That triggered the open offer.
“The proposed transaction is in line with our vision to create a leading financial services platform that encompasses lending, broking, and health insurance services,” said Anand C Burman, chairman emeritus, Dabur India.
Health Insurance
Care Health Insurance Ltd., the insurance subsidiary of Religare, is the second-largest standalone health insurance player in the country.
The company’s compound annual growth rate for gross direct premium income over FY18–23 was 36%, compared with the industry average of 19%. The company has a 5.3% market share in the health premium industry, with 250 branches and 21,580 employed healthcare providers.
Religare Enterprises holds a 64.98% stake in Care Health, with the remainder being held by Keedara Capital (16%), Union Bank of India (6%), and other shareholders (~13%).
Financing
Religare Finvest Ltd. and Religare Housing Development Finance Corp. are the two subsidiaries catering to the small business and affordable housing financing segments, respectively.
Religare Finvest has about 1,000 active customers across 19 branches, with assets under management at Rs 1,120 crore as of FY23. The company provides loans for working capital needs, business expansion, and short-term trade finance.
The net NPA for the lender was down to 2.2% in FY23 versus 23.7% in FY22, and collection efficiencies improved to 96% in FY23, compared to 87% in the previous fiscal.
Religare Housing is focused on providing housing loans and loans against property. They focus on low- and middle-income customers across tier 2 and 3 cities.
The average ticket size of the loan book is Rs 10.7 lakh. The capital-to-risk-weighted assets ratio for FY23 was over 100%, implying a sufficient capital buffer to cover potential losses.
India’s low mortgage penetration, which is at 11% of nominal GDP, provides a long growth runway.
The mortgage industry growth rate was 13–14% over FY22–24E.
Broking And E-Governance
Religare Broking Ltd. is among the top 10 retail non-bank broking franchises, with over 10 lakh customers and over 1.4 lakh active clients.
The company offers retail broking services across cash, futures and options and currency. They have 74,000 daily users on their Dynami app.
In the e-governance segment, the company is a facilitation partner with National Securities Depository Ltd. for PAN and TAN registration and filing of tax collected at source and tax deducted at source returns.
It is also registered with the Association of Mutual Funds in India as a mutual fund distributor.
Their e-governance franchise acts as the registration authority with e-mudra for digital signature, among other services. The company has over 27,000 e-governance franchises as of FY23.
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