INSUBCONTINENT EXCLUSIVE:
HDFC Securities has a buy call on Repco Home Finance with a target price of Rs 689.
The current market price of Repco Home Finance is Rs
587.90.
Time period given by the brokerage is one year when Repco Home Finance price can reach the defined target
The view of the brokerage on the company:
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 per cent QoQ vs nearly 54 per cent in
FY18 and nearly 75 per cent in FY17)
The relatively subdued growth (+12 per cent YoY) was also owing to the conscious decision of slowing down LAP growth (flat sequentially)
Though yields remained firm, NIMs dipped 20bps (nearly 4.6 per cent) 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
We expect RoAAs to improve 13bps (to 2.29 per cent) over FY18-20E
Maintain BUY with a target price of Rs 689 (2.5x Mar-20 ABV of Rs 276).
