Repco Home Finance has target of Rs 250: SP Tulsian

SP Tulsian, sptulsian.com told CNBC-TV18, "I am impressed with the numbers having posted by Repco Home Finance. If you see the Q4 numbers, the top-line of Rs 114 crore with EPS of close to about Rs 5.90 with PAT of Rs 28 crore."

He further added, "If you recall this company went public on 13th March and this has been their first quarterly numbers after the company got listed and they mopped up Rs 270 crore at an issue price of Rs 172 per share. So obviously if you take the return on net worth close to about 18-20 percent they should be able to earn additional Rs 50 crore from these additional IPO funds which they have mobilised. So whole of FY13 had an EPS of Rs 17, but if you take the Q4 EPS which I said of Rs 5.90 probably indicates that FY14 will be having an EPS of maybe Rs 24-25 that is a conservative estimate."
"If you go by the business model this is a company promoted by the Repco Bank which is a Government of India owned bank and having a very strong presence in the southern part of India. They have 73 offices, 19 satellite centers and the best part is that the average loan ticket of the company is close to Rs 9.5 lakh per borrower and that is very ideal."
"The flats are getting sold between Rs 20-25 lakh and if you have this kind of average loan ticket size that indicates a very good situation for the company in terms of the recovery, in terms of charging slightly higher rate of interest."
"If I go by the fundamentals, the present book value of Rs 102 can get increased to about Rs 124-126 by end of 31st March, 2014. That means share is ruling at a forward price-to-book of 1.6 and on the historic it is 1.9 and if I take the expected EPS of Rs 24-25 for FY14 it is ruling at a sub-PE multiple of less than 8. That has been the case with many other mid-sized housing finance companies, I am not talking of the larger one."
"So taking all this into consideration I think this is a very good stock which one could have in the portfolio with couple of years view and expect a 20 percent kind of return every year and price target for one year is at Rs 250."