Repco Home Finance Ltd. share price target

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 155 branches and 24 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 ~117bn at the end 3QFY22. RHFL average loan per unit is...

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 153 branches and 24 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 ~118bn at the end 2QFY22. RHFL average loan per unit is...

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 153 branches and 24 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 ~119bn at the end 1QFY22. RHFL average loan per unit is...

Repco Home Finance Gross stage 3 assets improved to 3.7% vs 4.3% YoY (4.3% Proforma NPA in Q3FY21); Net NPA declined to 2.3% led by higher PCR at 40% YoY. Restructured assets remains stable at 0.3% for FY21 while need to watch out for Restructuring 2.0. Loan growth was lower at 2% YoY (4% YoY Q3FY21) vs 7% YoY (FY20) led by higher balance transfers by banks as well as lower disbursements (up 6% YoY). NII grew by 6% YoY (down 3% QoQ) led by improvement in NIMs; PPoP grew by 9% YoY led by higher other income (up 41% QoQ). PAT grew strongly by 33% YoY led by lower provisions (down 28% YoY). Despite the lower growth it is able to garner a spread of 3.5% with a comfortable liquidity position. We...

Repco Home Finance (REPCO)'s PAT grew 14% YoY to INR796m in 3QFY21, 8% above our estimates. The PAT beat was driven by an NII beat, marginally offset by slightly higher provisions. The quarter gone by was characterized by a recovery in disbursements, improvement in margin, and maintenance of asset quality....

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...

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%...

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).