Repco Home IPO - Small but long term play; subscribe: Ajcon
Ajcon Global has come out with its report on Repco Home Finance (RHFL) IPO. According to the research firm, at the upper band of the issue price, the company is valued at 2.36x – Book Value /share at upper end of the price band. One can subscribe to this issue, says Ajcon Global.
March 11, 2013 / 18:49 IST
Ajcon Global has come out with its report on Repco Home Finance (RHFL) IPO. According to the research firm, the company is valued at 2.36x - Book Value /share at upper end of the price band. One can subscribe to this issue, says Ajcon Global.
RHFL is promoted by The Repatriates Cooperative Finance and Development Bank Ltd. (Repco Bank Ltd.), a Government of India owned enterprise, in April 2000. The Company is regulated by the National Housing Board. RHFL is engaged primarily in the business of financing i) the construction and/or purchase of residential and commercial properties including repairs and renovations (Individual Home Loans); and ii)loans against properties. RHFL focuses on the largely under-penetrated customer segment, both salaried and self employed, which has helped the Company grow profitability. As of December 31, 2012, the Company had 73 branches and 19 satellite centres located in Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Maharashtra, Odisha, West Bengal, Gujarat and the Union Territory of Puducherry. Further, as of December 31, 2012, 77 of its branches and centres were located in tier 2 cities and tier 3 cities, and at the peripheries of tier 1 cities. The company is faced with a deteriorating trend in its profitability and its asset quality indicators over the last two-three financial years. RHFL’s profitability indicator nevertheless continues to remain healthy (ROE: 22.3% in fiscal 2012) vis-à-vis industry standards and it currently has a comfortable capitalization profile (gearing 8.3 times in March, 2012). The Company’s gross NPA and net NPA as at September 30, 2012 stood at 2.12% and 1.6% respectively. The robustness of the risk management systems is demonstrated by the fact that the total amount of loans written off since inception till September 30, 2012 was only Rs. 3.7 crores (0.08% of its total disbursements of Rs. 4,313 crores for the same period.At the upper band of the issue price, RHFL is valued at 2.36x – Book Value /share at upper end of the price band which we believe is in line with the industry. With due consideration to factors like a) low cost operations and strong profitability with robust margins, b) favorable housing finance sector outlook, c) established presence in South India (strong brand name), especially in Tier II and Tier III cities, for over a decade focusing on niche customer segment, d) strong asset quality (low NPAs) with robust risk management systems, we recommend investors to "SUBSCRIBE" the issue, says Ajcon Global research report.Also Read: Channel Nine Entertainment to list shares on TuesdayDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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