MOSL: Morning India (11/December/17)-1. Repco Home Finance (At the crack of dawn)-2. Tata Motors-3. Economy (Fuel or Engines)

​MOrning India (11/December/17): 1. Repco Home Finance (At the crack of dawn); 2. Tata Motors; 3. Economy (Fuel or Engines)

Today’s top research idea

Repco Home Finance: At the crack of dawn; Most issues resolved; Price correction provides a good entry point

• FY17 was a tough year for REPCO due to unfavorable regulations, demonetization, and slippage of some high-ticket LAP loans into NPL.
  
• However, there are some early signs of turnaround. A well-set procedure is now in place for regularization of unapproved plots. Our interaction with a senior bureaucrat reveals that 8,000 out of ~20,000 unapproved plots are already regularized; remaining should be regularized over next six months.
  
• Sand prices have surged over past year. Government has taken some steps to address this problem. Meanwhile, the HC recently came out with an order banning sand mining in TN for next six months and recommending import of sand. Our channel checks reveal that cost of imported sand, inclusive of custom duties, is one third that of mined sand in TN. Restoration of normalcy here will go a long way in boosting real estate demand.
  
• While FY18 should be another year of slow growth, we expect growth to pick up to 18-20% from FY19. The stock trades at 2.5x FY19E BVPS (discount to peers as well as its history). Buy with a TP of INR750 (2.5x FY20E BVPS).
  

Piping hot news

Bankers look for speedy resolution of 28 accounts ahead of deadline

• Bankers are looking to speed up the resolution of 28 accounts including Videocon Industries, Jaiprakash Associates and Uttam Galva Steel as a December 13 deadline looms. These companies are part of the Reserve Bank of India's second list of defaulters to be referred to bankruptcy proceedings for recovery of more than Rs 2 lakh crore.