Sharekhan has given Hold recommendation for Repco Home Finance with a target price of Rs. 160 in its research report issued on May 25, 2022

Sharekhan’s research report on Repco Home Finance

For Q4FY2022, Repco Home Finance recorded dismal performance in business metrics with lower-than-expected disbursement. PAT was below our expectations on account of higher provisioning during the quarter. PAT stood at Rs. 42 crore, down ~34% y-o-y. However, NIM improved by 30 bps y-o-y and 9 bps q-o-q. Asset quality remained stable with GNPA flat sequentially in Q4FY2022. Management foresees asset-quality improvement with GNPA ratio declining by 60 bps to 120 bps from H1FY2023 onwards. Disbursement stood at Rs. 601 crore, down 6% y-o-y and 35% q-o-q. The company expects its loan book to grow by 10% to 11% in FY2023. At the CMP, the stock trades at 0.3x/0.3x its FY2023E/FY2024E P/BV. Although management has formulated strategy and stated guidance for loan book growth, asset quality and credit costs, the delivery on these objectives by the management remains a key.

We revise our rating downwards to Hold from Buy with a revised PT of Rs. 160.

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