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Buy Repco Home Finance; target of Rs 225: YES Securities

YES Securities is bullish on Repco Home Finance has recommended buy rating on the stock with a target price of Rs 225 in its research report date May 25, 2022.

May 30, 2022 / 09:54 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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YES Securities' research report on Repco Home Finance


Repco’s Q4 FY22 PAT was significantly below our estimate on higher credit cost, even though NII and PPOP were in-line. Loan book was sequentially flat as expected, but disbursements and portfolio run-off were 8-10% higher than our expectations. March disbursements were healthy at near Rs3bn (v/s Rs2.8bn yoy), and BT Out in the quarter was unusually higher at Rs4.6bn (Rs2.84bn in Q3 and Rs2.48bn in Q4 FY21). BT Out has come-off a bit in current quarter, and management expects it to moderate post the introduction of a Top-up loan product (CIBIL linked) and interest rate reduction powers (up to a certain level) for Branches and Regional Offices. Disbursements in Q1 FY23 is expected near Q4 FY22 level of Rs6bn and for the whole year is targeted at Rs30bn (Rs17.7bn in FY22). About 8-10 branches would be added in FY23.



Outlook


Repco trades at an undemanding valuation of 0.4x P/ABV and 3x P/E on FY24 estimates. Retain BUY.

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first published: May 30, 2022 09:54 pm
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