The fact that Reliance Capital's consolidated net profit fell from Rs 1,015 crore in 2008-09 to Rs 290 crore in 2010-11explains the under-performance of the stock. Regulatory tightening, both in the mutual funds and insurance segment coupled with a weakness in equity markets has dampened earnings during this period.

Besides, moving away from unsecured lending to secured assets in the consumer finance segment, limited the loan book growth.

The revenue contribution of the proprietary investment book, the main driver for earnings growth during the previous years, has also declined over the last couple of years. In addition, the losses on general insurance business has widened.

This apart, Reliance Money, the company's fully owned subsidiary, along with other broking-cum-finance houses, has been a victim of the prolonged stock market under-performance. Consequently, it had to scale down its points of presence.

Reliance Capital was also victim of sell-off of ADAG group companies' stocks by investors over the last few months. While the earnings fall led to under-performance until recently, the removal of Reliance Capital from NSE CNX Nifty index has pressurised the stock further.

Even the recent deal with Nippon Life which pegs its insurance subsidiary value close to its overall market capitalisation, has not helped matters.

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