Hold Repco Home Finance: target of Rs 160: Sharekhan

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Sharekhan's research report on Repco Home Finance

For Q4FY2022, Repco Home Finance recorded dismal performance in business metrics with lower-than-expected disbursement. PAT was below our expectations on account of higher provisioning during the quarter. PAT stood at Rs. 42 crore, down ~34% y-o-y. However, NIM improved by 30 bps y-o-y and 9 bps q-o-q. Asset quality remained stable with GNPA flat sequentially in Q4FY2022. Management foresees asset-quality improvement with GNPA ratio declining by 60 bps to 120 bps from H1FY2023 onwards. Disbursement stood at Rs. 601 crore, down 6% y-o-y and 35% q-o-q. The company expects its loan book to grow by 10% to 11% in FY2023. At the CMP, the stock trades at 0.3x/0.3x its FY2023E/FY2024E P/BV. Although management has formulated strategy and stated guidance for loan book growth, asset quality and credit costs, the delivery on these objectives by the management remains a key.

Outlook
We revise our rating downwards to Hold from Buy with a revised PT of Rs. 160.

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