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 151 branches and 31 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 29% CAGR (FY12-FY16) and stood at INR ~79.5bn at the end 1QFY17. RHFL average loan per unit...

Repco Home Finance’s (REPCO) 1QFY17 PAT grew 30.8% YoY (5% beat), driven by strong NII growth (+27% YoY, 3% beat) and significant cost control. Moreover, operating expenses declined 3.5% YoY (20% miss). Business momentum remained healthy, with the loan book up 26% YoY to INR79.6b, in line with prior quarters’ growth trajectory. However, sanctions and disbursements in 1QFY17 grew only 3% each due to the impact of Tamil Nadu state elections. However, management expects disbursement growth to pick up going forward. The loan mix shifted marginally toward self-employed (59.1% share v/s 57.1% in 1QFY16). The share of LAP loans also increased marginally to 20.1%. Margins remained stable YoY at 4.3%. Asset quality remained stable YoY with GNPLs at 2.22% (also 2.22% in 1QFY16). However, REPCO made provisions of INR179m v/s INR113m in 1QFY16 in order to increase PCR, which stood 45.1% v/s 41.8% last year. Operating expenses fell 3.5% YoY, with an equivalent decline in both employee and other operating expenses. As a result, C/I ratio declined ~500bp YoY to 16.2%.Motilal Oswal Maintain Buy with a TP of INR966/share (4.5x FY18 BV).

Outlook and valuation: Repco is a play on the structural growth in the mortgage market withitsnichefocusontheunderservedselfemployedsegmentinsmallertownsandcities in India. The immense opportunity in lesscompetitive rural housing and the company's...

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 150 branches and 35 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 29% CAGR (FY12-FY16) and stood at INR ~76bn at the end 4QFY16. RHFL average loan per unit is...

Repco's 4QFY16 PAT grew 21.3% YoY to INR422m (6% miss); While the operating profits was 7% above est. (due to lower opex); higher provisions of INR140m v/s est. of INR60m (led by higher write-offs and increase in provisions...

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 has113 branches and 38 satellite centers of which ~87% are located in the Southern market. Repco has grown from strength to strength with its loan book clocking 30.7%YoY and stood at INR 71.5bn at the end 3QFY16. RHFL average loan ticket size is at INR 1.30mn, with live accounts at 64,303. RHFL maintained a healthy NIM of 4.4%, along...

Outlook and valuation: Repco is a play on the structural growth in the mortgage market withitsnichefocusontheunderservedselfemployedsegmentinsmallertownsandcities in India. The immense opportunity in lesscompetitive rural housing and the company's...

book CAGR of +27% (primarily driven by volume growth) over FY1518, enabled by increasing geographical presence and strong demand in selfconstruction. Traction in recentlyopenedbranchesandadditionofnewbranchwilladdtothevolumegrowth.Self...

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 has108 branches and 38 satellite centers of which ~87% are located in the Southern market. Repco has grown from strength to strength with its loan book clocking 30% CAGR (FY11-FY15) and stood at INR ~68.4bn at the end...

Repco reported another quarter of strong operating performance as the earnings grew by 20% YoY (29.2% QoQ) to Rs 391 mn led by strong growth in non- interest income. Asset quality deteriorated on annual basis though it improved QoQ due to seasonality.