Motilal Oswal - Repco Home Finance (REPCOHOME) MOSL: REPCO HOME FINANCE (Buy)-Strong operating performance-GNPL declines sequentially

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Motilal Oswal

Alpesh Mehta

MOSL: REPCO HOME FINANCE (Buy)-Strong operating performance-GNPL declines sequentially

Repco Home Finance: Strong operating performance; GNPL declines sequentially

(REPCO IN, Mkt Cap USD0.6b, CMP INR615, TP INR800, 30% Upside, Buy)

Repco Home Finance (REPCO) reported 2QFY18 PAT of INR559m (+22% YoY), driven by an improvement in margins and contained opex growth.

Disbursements picked up after three slow quarters post demonetization. At INR7.5b this quarter, it is just 15% below the levels of 2QFY17 (before demonetization). This drove sequential loan growth of 3.6%, the highest since demonetization. With a pick-up in disbursements, coupled with a favorable base, we expect loan growth for FY18 to be in mid-teens.
Repayment rate in the quarter was 20.4%, in line with the past trends (excluding 1QFY18). We are encouraged by the fact that the company has been able to keep the repayment rate stable.
Another key highlight this quarter was the strong yield on loans, which increased 40bp sequentially to 11.9% due to NPL recoveries and re-pricing in LAP portfolio. As a result, spreads/margin were up 50bp YoY to 3.4%/4.8%.
The company witnessed a decline in absolute GNPLs (-INR377m QoQ to INR3.2b) after six quarters. GNPL ratio declined from 4% to 3.4% sequentially, driven by a 120bp fall in LAP NPLs to 5.2%.

16/11/2017 10 EN

Underlying

Repco Home Finance

Repco Home Finance Limited is an India-based housing finance company. The Company provides a range of home loan products to individual borrowers in both the salaried and non-salaried (self-employed professional and self-employed non-professional) segments to suit various requirements. The Company has presence in two segments: Individual Home Loans and Loans Against Property. The Company's loans for construction or purchase of house property include Dream Home Loan, Super Loan, Fifty Plus Loan, NRI Housing Loan, New Horizon Loan, Repco - Rural Loan and Repco - Premium Loan. The Company's loans for repair and renovation/extension of existing property include Home Makeover Loan. The Company offers loans for purchase of plots, such as Plot Loans. The Company offers loans against property, such as Prosperity loan. The Company has a network of approximately 150 branches/satellite centers. The Company also offers Repco - Delight, New Horizon Loan and Commercial Real Estate (CRE) Loan.

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INE612J01015 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Alpesh Mehta

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MOSL: REPCO HOME FINANCE (Buy)-Strong operating performance-GNPL declines sequentially

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MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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