Buy Repco Home Finance; target of Rs 683: HDFC Securities

HDFC Securities' research report on Repco Home Finance

REPCO’s  4Q  numbers  beat  estimates  given the claw back in asset quality (GNPAs  dipped ~20% QoQ). Though overall growth (+10% YoY) was sluggish, it was  largely  owing  to  (deliberately) tepid growth in LAP (up merely 2%).  Credit  costs  dipped  (60bps  ann.  vs.  83bps  in 3Q) as REPCO wrote back provisions  of  Rs  28mn.  NIMs  too  improved  20bps QoQ to 4.8% as yields remained flat and COF dipped 30bps.

Outlook

We like REPCO for its steady (if slow) healing, 2%+  RoAAs  and the sizable addressable opportunity. Maintain BUY with a TP of Rs 683 (2.5x Mar-20 ABV of Rs 273).