Centrum is bullish on Repco Home Finance has recommended buy rating on the stock with a target price of Rs 673 in its research report dated November 29, 2016.
Centrum's research report on Repco Home Finance
While RHFL continued to report good set of numbers, the stock has corrected 20% post the government’s announcement of currency demonetization and 31% since our Q1 update. This was mainly on the back of rising concerns relating to the high contribution of the self-employed class (60% of total book) to the total book and loan against property (LAP) loans at +20% of loans. The company is expected to face NPA pressure for a quarter or two due to larger exposure to the self-employed class. However, as the liquidity improves and smaller businesses get rolling, we expect the recoveries to pick up again. Further, the company is expected to benefit in the long run, from the possible decline in property prices. Considering the future growth prospects of RHFL, we remain positive on the stock from a long term perspective and recommend Buy with a target price of Rs 673, valuing the stock at 3.5x its FY18E ABV.
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