Neutral Repco Home Finance; target of Rs 375: Motilal Oswal

Motilal Oswal recommended Neutral rating on Repco Home Finance with a target price of Rs 375 in its research report dated August 08, 2023.

Broker Research

August 12, 2023 / 12:15 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Repco Home Finance

Repco Home Finance (REPCO)’s 1QFY24 PAT jumped 44% YoY to INR891m, driven by a sharp decline in credit costs to ~15bp (PY: ~80bp). NII grew 17% YoY to INR1.55b. PPOP grew 16% YoY to INR1.25b during the quarter. GNPA/NNPA improved ~30bp/25bp QoQ to 5.5%/2.8% and the company increased its PCR on S3 loans by ~180bp QoQ to ~51%. ECL/EAD was flat sequentially at 4.1% in 1QFY24. We would wait for: a) the asset quality outcome of the restructured pool that has resumed repayments but still remains vulnerable; b) further scaleup in disbursements; c) moderation in credit costs and d) a further decline in BT-OUT run-rate, before turning constructive on the stock again.

Outlook

We raise our FY24E EPS by 9% to factor in higher margins. We model a loan growth of 9%/11% in FY24/FY25 and a PAT CAGR of 14% over FY23-FY25E. With RoA/RoE of 2.6%/13% in FY25E, we reiterate our Neutral rating on the stock with a TP of INR375 (premised on 0.7x FY25E BVPS). While several process improvements are underway with the new management, they are yet to instill confidence in achieving healthier home loan growth. This would serve as the primary catalyst for a subsequent re-rating of the stock.

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