REPCO reported a tepid 4% YoY increase in 3QFY18 PAT to INR485m (15% miss). Sluggish loan growth, a sharp uptick in opex and a modest sequential increase in the GNPL ratio were key highlights of the quarter. While 3Q is a seasonally weak quarter in terms of disbursements, we had expected a sequential pick-up due to the low base in 2Q. However, while sanctions were sequentially stable at INR7.7b, disbursements declined 13% QoQ to INR6.6b. Management attributed this to the lack of demand for self-construction due to unavailability of sand in Tamil Nadu. However, recently, the Supreme Court lifted the sand mining ban in TN via an interim order. Consequently, loan growth was sequentially similar at 9.6% (v/s 10% in 2QFY18), resulting in a loan book of INR94.9b. We expect loan growth of ~10% in FY18, which should increase to ~14% in FY19 and further thereafter.