Cholamandalam securities' research report on Repco Home Finance
Repco Home Finance Limited (RHFL) is a low to medium ticket size home loan financing company predominately based in tier II / III cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, RHFL presently has 153 branches and 24 satellite centers of which ~87% are located in the southern market. Repco has shown robust growth in its loan book clocking 21% CAGR (FY13-FY19) and stood at ₹~121.2bn at the end 4QFY21. RHFL average loan per unit is at ₹1.5mn, with live accounts at 101,153. RHFL maintained a healthy NIM of 4.8%, along with GNPA at 3.7% for 4QFY21.
Outlook
A robust business model with attractive return ratios makes RHFL favored player in the housing finance space. Steady asset quality, sound loan spread, comfortable liquidity position, declining cost of funds and the management’s cautious lending approach are all factors we believe will lend support to earnings in near term. We arrive at a target price of ₹ 432, assigning a P/ABV of 1X FY23E, maintaining our rating as BUY on the stock.
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