Buy Repco Home Finance; target of Rs 689: HDFC Securities

HDFC Securities is bullish on Repco Home Finance has recommended buy rating on the stock with a target price of Rs 689 in its research report dated August 17, 2018.

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September 18, 2018 / 13:23 IST

26 Aug, 2025 12:21

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HDFC Securities' research report on Repco Home Finance

Post a recovery in the previous quarter, REPCO posted yet another decent set of numbers. While asset quality deteriorated, it was a 1Q phenomenon and lacked the typical spike (GNPAs up 41% QoQ vs ~54% in FY18 and ~75% in FY17). The relatively subdued growth (+12% YoY) was also owing to the conscious decision of slowing down LAP growth (flat sequentially). Though yields remained firm, NIMs dipped 20bps (~4.6%) sequentially as CoF jumped 20bps QoQ. While the controlled accretion in GNPAs was encouraging, weak recoveries (post a robust 4QFY18) was underwhelming. However, we remain hopeful given the conscious decision of shying away from high ticket LAP loans and large a stock of assets under SARFAESI. We believe growth should certainly improve as REPCO expands into newer geographies and disruptions (registration and sand mining) in its home state subside. We expect RoAAs to improve 13bps (to 2.29%) over FY18-20E.

Outlook

Maintain BUY with a TP of Rs 689 (2.5x Mar-20 ABV of Rs 276).

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