Motilal Oswal - Repco Home Finance (REPCOHOME) MOSL: REPCO HOME FINANCE (Buy)-Stable quarter in a tough environment-Credit costs surprise negatively

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Motilal Oswal

EUR 120.00 For Business Accounts Only

MOSL: REPCO HOME FINANCE (Buy)-Stable quarter in a tough environment-Credit costs surprise negatively

Repco Home Finance: Stable quarter in a tough environment; Credit costs surprise negatively

(REPCO IN, Mkt Cap USD0.3b, CMP INR366, TP INR480, 31% Upside, Buy)

REPCO’s 3QFY19 PAT grew 31% YoY to INR556m (9% miss) driven by stable loan growth and spreads. The miss on our estimates came from higher-than-expected opex and credit costs offset by a lower tax rate (26%). The ECL model is still evolving under Ind-AS, which is driving volatility in credit costs.
Business growth was decent in a tough environment – disbursements were up 12% YoY to INR7.33b. However, home loan disbursement growth was modest at 7% YoY.
An important trend noticed across HFCs over the past two quarters is the decline in repayment rate. For REPCO, this has been declining from the highs of 21% in 3QFY18 to 17% in the prior quarter. Consequently, overall loan book growth was a steady 12% YoY. However, Tamil Nadu continues to be sluggish (7% YoY AUM growth).
Despite the liquidity tightness, CoF (calc.) increased only 14bp QoQ to 8.4%. Also, on account of yield hikes, spread was sequentially unchanged at 3.0%.
GNPL ratio increased 30bp QoQ (seasonal factors) to 3.9%. Credit costs declined 30% YoY to INR182m. ECL provisions now stand at 80bp of loans.

14/02/2019 12 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

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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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MOSL: REPCO HOME FINANCE (Buy)-Stable quarter in a tough environment-Credit costs surprise negatively

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MOSL : SHOPPERS STOP: Ticking the right boxes

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

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