Neutral Repco Home Finance; target of Rs 430: Motilal Oswal

Motilal Oswal's research report on Repco Home Finance

Repco Home Finance’s (Repco) 1QFY26 PAT grew 2% YoY to INR1.1b (6% beat). NII in 1QFY26 grew ~8% YoY to ~INR1.8b (in line). Other income was broadly flat YoY at INR150m. Opex rose ~17% YoY to INR530m (~8% lower than MOFSLe). PPOP grew ~4% YoY to INR1.4b (~7% beat). Provision writebacks stood at INR27m, translating into 1QFY26 annualized credit costs of -7bp (PY: 4bp and PQ: -65bp). GNPA rose ~5bp QoQ to ~3.3%, while NNPA dipped ~10bp QoQ to ~1.2%. The company increased the PCR on S3 loans by ~220bp QoQ to ~62%. Repco shared that the company has not witnessed any unusual trends or significant deterioration in any state. For the new book (originated post Apr’22), GS2 stood at 5% (vs 9.7% for the overall book) and GS3 stood at 1.1% (vs. 3.3% for the overall book).

Outlook

We believe the company will have to start delivering stronger loan growth in its core home loan product to command higher valuations. We reiterate our Neutral rating with a TP of INR430 (based on 0.7x Mar’27E BVPS).