Chola Securities
Repco Buy)
CMP: ₹568.50
Target: ₹684
Repco Home Finance Ltd’s loan book grew at moderate rate (10.3 per cent y-o-y, 3.9 per cent q-o-q) to ₹9,900 crore on the back of higher disbursements (27.7 per cent y-o-y, 29.2 per cent q-o-q). In 4QFY18, sanctions grew by 32.2 per cent y-o-y (19.4 per cent q-o-q) which poses healthy loan growth trajectory for coming quarters.
The management expects loan book to grow by about 20 per cent in FY19E (15 per cent growth in TN and 20-25 per cent growth in ex-TN regions) and disbursements by 35-36 per cent in FY19E.
Growth in loan book was led by salaried segment (18.8 per cent y-o-y). Non-salaried segment witnessed a moderate growth of 4.6 per cent y-o-y. Consequently, their share in overall portfolio stood at 42.9 per cent and 57.1 per cent respectively. Management intends to maintain the loan mix at the current levels.
We maintain ‘buy’ rating on the stock and arrive at target price at ₹684, assigning a P/BV of 2.2x FY20E.