Motilal Oswal - Repco Home Finance (REPCOHOME) MOSL: REPCO HOME FINANCE (Buy)-Business performance stable-Core Tamil Nadu market remains subdued

Report

Motilal Oswal

Alpesh Mehta

EUR 120.00 For Business Accounts Only

MOSL: REPCO HOME FINANCE (Buy)-Business performance stable-Core Tamil Nadu market remains subdued

Repco Home Finance: Business performance stable; Core Tamil Nadu market remains subdued

(REPCO IN, Mkt Cap USD0.4b, CMP INR403, TP INR500, 24% Upside, Buy)

4QFY19 PAT grew 58% YoY to INR515m (10% miss), driven by modest loan growth, spread compression and lower credit costs (-INR24m v/s INR400m YoY). The miss v/s our estimates was driven primarily by lower NII, which the company attributed to fee income reversal of INR160m, driven by higher ECL provisions (150bp v/s 80bp earlier).
Business growth was modest - disbursements up 3% YoY to INR8.8b. However, home loan disbursements declined 3% YoY. Overall loan growth was 3.5% QoQ/ 12% YoY; however, loan growth in its core state of Tamil Nadu (TN) remained sluggish at 6% YoY. Note: repayment rate has been lower in every quarter of FY19 as compared to FY18, pointing to lower balance transfers.

03/06/2019 1 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)-Business performance stable-Core Tamil Nadu market remains subdued

Monthly LMI Update Independent Investment Research

MOSL: REPCO HOME FINANCE (Buy)-In-line operating performance; asset quality stable

Feasibility Study Results in December to be a Catalyst for this Junior

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

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

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