Mahanagar Gas: Our ADD recommendation on Mahanagar Gas (MGL) with a price target of INR 916 is premised on its loyal customer base of CNG and commercial establishments (together comprising ~80% of the sales mix in FY20), which are less price-sensitive than industrial customers that enable the company to maintain its per-unit margins higher than peers. We do not foresee any significant regulatory adversity in its CGD business either through a change in gas allocation or capping returns. 2QFY21 EBITDA/APAT was 41/43% above estimates, owing to 9% higher-than-anticipated volumes, and 30% higher per-unit EBITDA margin. Repco Home Finance: REPCO's 2Q earnings were ahead of estimates, led by lower-than-expected provisions. The company, like most lenders, saw a sharp improvement in collection efficiency and a sequential rebound in disbursals. We have revised our estimates upwards, as we factor in lower (vs. our earlier estimates) provisions and slightly faster loan growth. The company continues to remain comfortable in terms of funding and liquidity (CRAR- 26.8% and available undrawn lines at ~17% of AUM), and these drive our ADD rating (target price of Rs 282). ONGC: Our REDUCE recommendation on ONGC with a price target of INR 70 is premised on (1) muted crude oil and gas realisations and (2) lack of production growth for oil. Despite production cuts from OPEC and non-OPEC countries, we expect oil prices to remain at USD 36/41 per barrel in FY21/22E vs. USD 59/bbl in FY20, given the weak global macro. Lower oil and gas realisations will drag profitability down for ONGC. In 2QFY21,...

Repco Home Finance (RHFL) reported NII growth of 12.9% YoY and 9.1% QoQ, driven primarily by NIM expansion (up 30bps YoY and 30bps QoQ) even as advances growth was soft (5.2% YoY, 0.9% QoQ), partially impacted by high balance transfers by banks. Cost of funds improved by 10bps QoQ to 8.2% in 2QFY21 but it is unlikely to come down further. Disbursements during the quarter were up 157.3% QoQ but were still substantially lower than last year (down 33.4% YoY). The trend in disbursals pick-up has been in line with the broader industry trend, though not to the extent that the larger HFCs have witnessed. In 2HFY21, the company expects disbursals to revert back to normal run-rate. With Tamil Nadu (55.7% of the book) clocking a 4% YoY growth, geographical concentration...

Background: Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 149 branches and 27 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at ~119.7bn at the end 1QFY21. RHFL average loan per unit...

However, REPCO's strong capital base (CRAR at 26.1%) and comfortable funding position are (remain) positives and drive our ADD rating (target price of Rs 207, 0.7xFY22E ABV) along with relatively inexpensive valuations. REPCOs 1Q earnings were adversely impacted by a sharp fall in margins and elevated provisions. The sequential reduction in Gross Stage III was optical. Further, while the portfolio under moratorium remained sticky at ~35%, borrowers representing 8.7% of loans had not paid a single instalment since March, which was more confounding than promising, given that collection efficiency for the month was between 65-70%.

Repco Home Finance (RHFL) reported NII at Rs1,280mn, up 0.7% YoY/down 7% QoQ. Tepid advances growth of 6% YoY/1% QoQ was due to 73% YoY/70% QoQ decline in disbursements. Disbursements were mainly to loans sanctioned before March. Business activity during June/July stood at 50%/60% of normal levels. Drop in YoA exceeded the decline in CoF, leading to NIM decline of 20bps YoY/40bps QoQ at 4.3%, partly due to interest reversals. Incremental CoF witnessed 186bps MoM decline at 6.37% in June'20 due to better rates from NHB and banks. We expect the CoF to decline going forward. Operating expenses were flat YoY/down 23% QoQ, leading to PPOP growth of 4% YoY/decline of 1.2% QoQ at Rs1,080mn. Provisions, though down 45% QoQ, continued the higher...

Repco Home Finance (RHFL) reported 4QFY20 operational performance above our estimates with NII and PPOP coming 8.4% and 6.6% above our estimates, respectively. The loan book growth was 6.9% YoY (flat QoQ). The disbursals were weak at Rs6bn, down 31.4% YoY and 8.2% QoQ. We expect a weak growth outlook in the near-to-medium term for the company. We think the management's focus would be on mending the asset quality rather than chasing growth in a weak environment. NII grew by 18.5% YoY and 4.6% QoQ. NIM expanded by 40bps YoY and 10bps QoQ to 4.7% primarily on account of lower cost of funds, which declined by 20bps QoQ to 8.3% (on reported basis). The liquidity profile remains comfortable with virtually no pressure on the funding side. Incremental cost of funds stood at 8.37% in March 2020,...

Co. utilized strong operating performance to make additional provision of Rs400mn pertaining to likely Covid impact. Overall ECL cover rose to 1.8% of loan book (1.5%...

Repco Home Finance (RHFL) has reported its 3QFY20 results with the key pointers being: (1) Overall loan book grew 9% YoY, 3% QoQ at Rs116bn. Shift towards salaried segment continued (2) Asset quality broadly stable with gross stage 3 assets at 4.2% (flat QoQ, +30 bps YoY) (3) NIM improved 10bps YoY, 30 bps QoQ at 4.6% (See detailed conference call takeaways on page 2 for significant incremental colour). Per se, on the key P&L; items, RHFL posted NII growth of 14% YoY at Rs1,318mn, PPOP growth of 12% YoY at Rs1,048mn and PAT growth of 25% YoY at Rs697mn. We have revised our estimates for FY20/FY21/FY22 and retained Buy rating on RHFL,...

Sluggishness in its home state and a conscious effort to focus on less risky (low ticket LAP) and salaried home loans, and no major branch addition plans will curtail growth, in spite of REPCO's small base and healthy CRAR. Inexpensive valuations underpin our stance. Even the ascription of a measly 1.3x multiple, yields a considerable upside. REPCOs 3Q was in line with estimates as growth slowed (9%) and NIMs expanded (+30bps QoQ). Asset quality was stable QoQ. Maintain BUY with a TP of Rs 422 (1.3x Dec-21E ABV).

10 February 2020 PAT increased 25% YoY to INR697m (2% beat) in 3QFY20. While NII was largely in line with our estimate, higher opex (7% miss) was offset by lower provisioning (11% beat), leading to largely in-line PAT. Reported spreads improved 20bp QoQ/YoY to 3.3%, while the GNPL ratio was sequentially stable at 4.2%. Buy with a target price of INR390. Disbursements were down 11% YoY at INR6.6b due to a similar decline in both home loan and LAP disbursements. ~56% of the book (+6% YoY). Loan growth in Maharashtra (third largest state) also slowed down from 23% YoY in 2QFY20 to 17% YoY in 3QFY20. Reported spreads improved 20bp QoQ/YoY to 3.3%, driven by better yield and stable cost of funds. PCR increased by 100bp QoQ to 29%. While issues of sand mining and property registration in TN have been resolved, overall housing demand remains weak.

Background: Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 149 branches and 27 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at ~116.2bn at the end 3QFY20. RHFL average loan per unit...

Sector: Housing Finance / Small Cap | Earnings Update 2QFY20 Background: Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 148 branches and 27 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at INR ~114.9bn at the end 2QFY20. RHFL average loan per unit is at INR...

Repco Home Finance (RHFL) has reported its 2QFY20 results with the key pointers being: (1) Lack of demand and high competition from banks were the key reasons for subdued growth (2) We sense signs of pricing/margin pressure (3) GNPAs remain unchanged QoQ at 4.2% with uptick in the selfemployed/non-salaried segment. (See detailed conference call takeaways on page 2 for significant incremental colour). Per se, on the key P&L; items, RHFL posted NII growth of 11% YoY at Rs1,237mn, PPOP growth of 5% YoY at Rs1,021mn and PAT growth of 51% YoY at Rs1,006mn. We have revised our estimates for FY20/FY21/FY22 and retained Buy rating on RHFL, revising our target price to Rs389...

Repco Home Finance (RHFL) has reported its 2QFY20 results with the key pointers being: (1) Lack of demand and high competition from banks were the key reasons for subdued growth (2) We sense signs of pricing/margin pressure (3) GNPAs remain unchanged QoQ at 4.2% with uptick in the selfemployed/non-salaried segment. (See detailed conference call takeaways on page 2 for significant incremental colour). Per se, on the key P&L; items, RHFL posted NII growth of 11% YoY at Rs1,237mn, PPOP growth of 5% YoY at Rs1,021mn and PAT growth of 51% YoY at Rs1,006mn. We have revised our estimates for FY20/FY21/FY22 and retained Buy rating on RHFL, revising our target price to Rs389...

Inexplicably slow growth at REPCO, in the face of waning competition has disappointed for a while now. Availability of debt and ample CRAR (~25%) and liquidity are big positives, even though REPCO may not use this to grow much faster. At 1x FY21E ABV, our stance is mostly premised on inexpensive valuation. Slowing growth and stable asset quality in a qtr that usually sees seasonal improvement, disappointed. The tax cut boosted earnings. Maintain BUY with a TP of Rs 419 (1.5x Sept-21E ABV).

14 November 2019 REPCOs PAT was up 51% YoY at INR1.01b (37% beat), driven by low credit costs and a 1% tax rate (INR150m DTL reversal impact). Core PBT, however, grew 2% YoY to INR1.02b (4% beat). Disbursements were down 10% YoY at INR7b, driven by a decline in both home loan and LAP disbursements. Reported spreads were largely stable YoY at 3.1%, as the 30bp increase in cost of funds (to 8.5%) was offset by a similar rise in yields (to 11.6%). declined sequentially from 31% to 28%, leading to INR1m credit costs. The company wrote-off INR90m in the quarter (a mix of home loan and LAP). disbursements declined 7% YoY to INR13.7b, while spread was largely stable at 3%.

Background: Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 147 branches and 27 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at INR ~113.42bn at the end 1QFY20. RHFL average loan per unit is at INR...

We downgrade the target multiple for REPCO (from 2x to 1.5x) in view of deteriorating macros. This is in spite of access to adequate funds (from the largest PSB and PVT Bank), signs of improvement in growth with receding competition. However, we believe that the ill-effects of worsening macros are likely to override these positives. Valuations at ~1.1x FY21E remain enticing. A significant pickup in growth can drive up the stock, while further slips on asset quality pose risks. In spite of an in line 1Q performance (higher but sub-par growth, seasonal NPA spike and higher LLPs) we reduce multiple to 1.5x (from 2x) for REPCO given deteriorating macros. Maintain BUY. Our TP is Rs 443.

Repco Home Finance (RHFL) has reported its 1QFY20 results with the key pointers being: (1) GNPAs at 4.2% were seasonally high; the company has guided for FY20 asset quality to be better (2) Home market Tamil Nadu registered a growth of 8% YoY; overall growth guidance stands at 13-15% (3) Majority funding through banks and recent MCLR cuts should result in lower CoF; spread guidance is 3% for FY20. (See detailed conference call takeaways on page 2 for significant incremental colour). Per se, on the key P&L; items, RHFL posted NII growth of 7% YoY at Rs1,271mn, PPOP growth of 7% YoY at Rs1,035mn and PAT growth of 2% YoY at Rs624mn. We have revised our estimates for FY20/FY21 and retained Buy rating on RHFL, revising our target price to Rs424 (from Rs495 earlier)...

Sector: Housing Finance / Small Cap | Earnings Update 4QFY19 Background: Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 144 branches and 26 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at INR ~110.37bn at the end 4QFY19. RHFL average loan per unit is at INR...