Repco Home Finance
BSE SENSEX
40,286
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
11,872
REPCO IN
63
18.1 / 0.3
481 / 269
-5/-35/-44
208
62.9
2021E
5.4
4.7
3.3
52.2
338
2.5
16.6
7.0
5.5
0.9
1.1
14 November 2019
2QFY20 Results Update | Sector: Financials
CMP: INR289
TP: INR370 (+28%)
Buy
Loan growth largely stable; asset quality under pressure
REPCO’s PAT was up 51% YoY at INR1.01b (37% beat), driven by low credit
costs and a 1% tax rate (INR150m DTL reversal impact). Core PBT, however,
grew 2% YoY to INR1.02b (4% beat).
Disbursements were down 10% YoY at INR7b, driven by a decline in both home
loan and LAP disbursements.
Although overall loan growth was largely stable
at 11% YoY, it was sluggish at 7% YoY in Tamil Nadu (56% of book).
Overall
loan book stood at INR115b.
Reported spreads were largely stable YoY at 3.1%, as the 30bp increase in cost
of funds (to 8.5%) was offset by a similar rise in yields (to 11.6%).
REPCO
carried INR5b+ of liquidity on the balance sheet versus INR500m in 4QFY19.
GNPL ratio was stable QoQ at 4.2%. This is in contrast to the historical trend
of a seasonal improvement in the GNPL ratio in the second quarter.
Also, PCR
declined sequentially from 31% to 28%, leading to INR1m credit costs. The
company wrote-off INR90m in the quarter (a mix of home loan and LAP).
For 1HFY20,
disbursements declined 7% YoY to INR13.7b, while spread was
largely stable at 3%. RoA/RoE stood at 2.9%/21.6%.
Other highlights: (1) Tier I ratio was 24.5%. (3) Share of home loans was stable
QoQ at 81.5%. (4) Share of non-salaried customers fell 80bp QoQ to 53.4%.
Valuation and view:
Over the past three quarters, REPCO has managed the
liquidity situation with a high share of bank and NHB borrowings, thereby
depending less on market borrowings. Its spreads have been largely intact.
However, the ground situation in Tamil Nadu is still bleak. Hence, we expect 10-
11% AUM CAGR over the medium term. We cut our PBT estimates by ~4% for
FY20/21. Maintain
Buy with a target price of INR370
(1.0x Sep’21E BVPS).
FY19
2Q
3Q
2,870 2,982
1,755 1,848
1,115 1,134
-8.4
6.5
90
58
1,205 1,192
-2.7
5.9
236
253
25.7
16.0
970
939
-7.7
3.5
-35
182
1,004
757
338
201
666
556
-4.9
31.2
11.4
12.4
19.6
21.2
33.7
26.5
FY20
2Q
3QE
3,245 3,358
2,085 2,158
1,160 1,200
4.0
5.8
111
100
1,270 1,300
5.4
9.1
249
256
5.7
1.2
1,021 1,044
5.3
11.2
1
130
1,020
914
14
230
1,006
684
51.1
22.9
10.7
10.5
19.6
19.7
1.3
25.2
FY19
11,682
7,200
4,482
1.5
270
4,752
3.0
984
24.2
3,768
-1.4
170
3,598
1,252
2,346
16.7
12.3
20.7
34.8
FY20E
13,289
8,478
4,811
7.3
375
5,186
9.1
1,026
4.2
4,161
10.4
292
3,868
825
3,044
29.7
10.9
19.8
21.3
(INR M)
2QFY20
est.
3,312
2,095
1,216
9.1
90
1,306
8.4
253
7.4
1,053
8.6
70
983
248
735
10.5
12.5
19.4
25.2
Financials & Valuations (INR b)
Y/E March
2019 2020E
NII
4.4
4.8
PPP
3.8
4.2
PAT
2.3
3.0
EPS (INR)
37.5
48.6
BV/Sh. (INR)
244
289
RoAA (%)
2.3
2.6
RoE (%)
16.5
18.2
Payout (%)
7.0
7.0
Valuation
P/E (x)
7.7
5.9
P/BV (x)
1.2
1.0
Div. Yield (%)
0.8
1.0
REPCO: Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Loan growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOFSL Estimates
1Q
2,827
1,684
1,143
8.2
45
1,188
6.9
219
30.3
969
2.8
47
923
314
609
8.8
11.9
18.4
34.0
4Q
3,004
1,914
1,090
1.2
77
1,167
2.4
277
26.5
890
-3.4
-24
915
399
515
58.1
12.0
23.7
43.7
1Q
3,231
2,015
1,216
6.4
54
1,270
6.8
235
7.3
1,035
6.7
75
960
336
624
2.4
12.6
18.5
35.0
4QE
3,455
2,220
1,235
13.3
111
1,347
15.4
286
3.2
1,061
19.2
86
975
244
730
41.7
8.9
21.2
25.1
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526 |
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Repco Home Finance
Core TN market loan
growth remains tepid at 7%
YoY.
Loan growth largely stable
Loan book grew 11% YoY (+1% QoQ) to INR115b, largely in line with the trend of
the past several quarters.
Disbursements were 10% lower YoY. The repayment rate (annualized) was at
19% in 2QFY20 (+600bp QoQ).
Disbursements – HL: INR5.3b (-11% YoY), LAP – INR1.7b (-5% YoY).
Loan growth (YoY) slowed across key states – TN – 7%, Kar. – 17%, Mah. – 23%.
Calc. spreads down by
~15bp QoQ/YoY.
Spreads (calc.) under pressure sequentially
Calc. yields decreased by 18bp QoQ (+~15bp YoY) to 11.4%. Calc. cost of funds
was largely stable sequentially at 8.5% (+27bp YoY). Calc. Spreads were at 2.9%.
Calc. NIM was at 4.5%(-9bp/26bp QoQ/YoY).
Share of bank borrowings increased by 360bp to 75% this quarter, while NCD
share reduced by 100bp to 7.5%. There are no outstanding CPs.
GNPL ratio up 60bp YoY to
4.2%.
Asset quality deteriorates; C/I increases sequentially
Opex increased 6% QoQ/YoY compared to loan book growth of 11% YoY. The
spike in opex is largely driven by a rise in ‘employee exp’, up by 13% YoY to
INR156m this quarter.
Contrary to historical trends, no sequential improvement in the GNPL ratio was
witnessed this quarter – it stood at 4.2%. The company has provided for 28% on
its stage 3 loans (v/s 31% QoQ). While the GNPA ratio for salaried customers
was steady at 1.5%, the ratio deteriorated for the non-salaried customers by
30bp QoQ to 6.5%.
Total ECL provisions were at 1.4% of loans (-10bp QoQ).
Other details
Branch count increased to 175 (v/s 174 QoQ).
Tier I ratio stood at 25.1%.
Home loans share maintained at 81.5%.
The share of salaried customers continued increasing (+260bp/80bp YoY/QoQ)
to reach 47% in 2QFY20.
Valuation and view
REPCO has established a strong presence in the southern states and is steadily
expanding to other geographies.
Over the past year, the company has managed the liquidity situation well,
largely due to a high share of bank and NHB borrowings and less dependence on
market borrowings. It has liquidity amounting to 5% of its balance sheet.
Spreads have also been largely intact. The company has maintained its RoA/RoE
steady at ~2.2%/17% over the past four years.
However, even today, over half of the loan book still comes from TN, wherein
the ground situation is still bleak. Asset quality issues in LAP are yet to be
permanently resolved.
We cut our FY20/21 PBT estimates by 4%. Maintain
Buy with a TP of INR370
(1.0x Sep’21E book).
14 November 2019
2
 Motilal Oswal Financial Services
Repco Home Finance
Exhibit 1:
We cut our PBT estimates by 4%
INR b
NII
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
Loan book
NIM (%)
Spreads (%)
ROAA (%)
RoAE (%)
FY20E
5.0
0.4
5.4
1.0
4.3
0.3
4.0
1.0
3.0
122
4.3
3.0
2.6
18.1
Old Est.
FY21E
5.6
0.4
6.1
1.2
4.9
0.4
4.5
1.1
3.4
137
4.3
3.0
2.6
17.3
FY20E
4.8
0.4
5.2
1.0
4.2
0.3
3.9
0.8
3.0
120
4.2
3.0
2.6
18.2
New Est.
FY21E
5.4
0.4
5.9
1.1
4.7
0.4
4.4
1.1
3.3
134
4.3
3.1
2.5
16.6
Change (%)
FY20E
FY21E
-3.9
-4.0
-3.4
-1.5
-3.9
-4.6
-3.9
-18.7
1.1
-1.9
-2.9
-3.6
-2.6
-3.8
-2.8
-3.9
-3.9
-3.9
-2.3
-1.9
Source: MOFSL, Company
14 November 2019
3
 Motilal Oswal Financial Services
Repco Home Finance
Conference call highlights
Business Updates
Continue to move toward the salaried segment as the overall environment
appears tough.
Received sanctions of INR30b from multiple banks in 2Q. Of this, INR28b is
undrawn.
Reiterated loan growth guidance of 12-15% for FY20.
Competition from other HFCs has reduced significantly. However, there is still
competition from banks.
Had a DTL revision impact of INR150m (positive impact) during the quarter.
Liquidity on balance sheet of INR5b will, by and large, be a continuing
phenomenon.
Issues in TN are largely but not completely behind.
18% of disbursements in 2Q were from DSAs (up from 14% YoY).
Will not avail Section 36 (1)(8) benefit – hence, tax rate will be 25.2%.
Yields: HL – 10.7% (+10bp QoQ), LAP – 11.7% (+40bp QoQ), Total – 11.3%.
Asset Quality
Provisioning under the ECL model is INR800-900m lower than what the
company actually holds.
Wrote off INR93m during the quarter.
GNPL ratio to reduce to 3% by end-FY20.
More than 50% of GNPL accounts are still servicing their loans.
Others
Entire capital adequacy is tier I. That too, only CET I.
Liquidity on BS as of 1QFY20 – INR2b.
Average ticket size is INR1.4m.
Moved to a new benchmark – MLR – which takes into account cost of funds and
targeted profitability (15% RoE).
Will open branches at an annual run-rate of 10-15 branches.
14 November 2019
4
 Motilal Oswal Financial Services
Repco Home Finance
Exhibit 2:
Quarterly Snapshot
2Q
Profit and Loss (INR m)
Interest Income
Interest Expenses
Net Interest Income
Other Income
Net Income
Operating Expenses
Employee
Others
Operating Profits
Provisions
PBT
Taxes
PAT
Asset Quality
GNPA
Gross NPAs (%)
- Home Loan
- LAP
ECL Provisions
Ratios (%)
Cost to Income
Provision to operating profit
Tax Rate
Total CAR
RoA
RoE
Margins Reported (%)
Yield on earning assets
Cost of Funds
Spreads
NIMs
Business Details (INR b)
Loans
Individual Home Loans
Loans against Property
Total Loans
AUM Mix (%)
Individual Home Loans
Loans against Property
Total Borrowing Mix (%)
Banks
NHB
Repco Bank
NCD/CPs
2,843
1,626
1,217
22
1,238
187
126
61
1,051
-8
1,059
358
700
3,194
3.4
3.0
5.2
0.7
15.1
-0.7
33.8
22.1
3.0
23.5
12.4
8.5
4.0
5.4
FY18
3Q
2,686
1,621
1,065
60
1,125
218
138
80
907
265
642
218
424
3,515
3.7
3.2
5.9
FY19
4Q
2,687
1,610
1,077
63
1,140
219
121
97
921
404
517
192
326
2,827
2.9
2.4
4.9
0.0
19.2
43.8
37.0
23.0
2.3
18.5
11.1
8.0
3.1
4.7
1Q
2,827
1,684
1,143
45
1,188
219
130
89
969
47
923
314
609
3,987
4.0
3.0
6.8
0.7
18.4
4.8
34.0
0.0
2.5
19.8
11.3
8.2
3.2
4.8
2Q
2,870
1,755
1,115
90
1,205
236
138
98
970
-35
1,004
338
666
3,738
3.6
2.9
6.2
0.7
21.1
-3.6
33.7
23.7
2.6
19.4
11.2
8.2
3.0
4.7
3Q
2,982
1,848
1,134
58
1,192
253
147
106
939
182
757
201
556
4,160
3.9
3.2
6.8
0.8
22.3
19.4
26.5
24.2
2.1
15.4
11.3
8.4
3.0
4.5
4Q
3,004
1,914
1,090
77
1,167
277
171
106
890
-24
915
399
515
3,256
3.0
2.5
5.0
1.5
25.4
-2.7
43.7
23.9
1.9
14.2
11.1
8.4
2.7
4.3
1Q
3,231
2,015
1,216
54
1,270
235
147
88
1,035
75
960
336
624
4,764
4.2
3.6
6.9
1.5
19.3
7.2
35.0
24.5
2.2
17.7
11.5
8.6
3.0
4.5
FY20
2Q
3,245
2,085
1,160
111
1,270
249
156
93
1,021
1
1,020
14
1,006
4,828
4.2
3.6
6.8
1.4
21.5
0.1
1.3
25.1
3.5
26.1
11.4
8.5
2.9
4.4
Variation (%)
QoQ
YoY
0
3
-5
107
0
6
6
6
-1
-98
6
-96
61
13
19
4
23
5
6
13
-5
5
-104
2
-96
51
19.4
29.2
34.0
22.3
2.1
16.5
11.4
8.3
3.2
4.8
75
18
93
81
19
55
13
6
25
77
18
95
81
19
54
13
8
25
80
18
99
81
19
55
12
8
26
82
18
101
82
18
64
9
8
20
85
19
104
82
18
69
8
7
15
87
20
107
82
18
75
7
8
10
90
20
110
82
18
73
10
9
9
92
21
113
82
19
71
11
8
10
94
21
115
82
19
75
10
8
7
1
1
1
10
12
11
Source: Company, MOFSL
14 November 2019
5
 Motilal Oswal Financial Services
Repco Home Finance
Story in charts
Exhibit 3:
Disbursements continue declining
Disbursements (INR b)
6.6
5.0
-16
-26
-9
5.5
-14
7.5
6.6
8.5
7.0
7.8
7.3
8.8
6.7
31
28
28
3
12
3
Growth (%)
Exhibit 4:
Loan growth at 11% YoY
21
16
-5
13
Loan (INR b)
Loan Growth (%)
10
10
10
12
11
12
12
13
11
-10
7.0
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5:
Share of salaried customers up 80bp QoQ (%)
Non-salaried
Salaried
Spreads largely stable on YoY basis (%)
Calc. NIM (%)
Calc. Spreads (%)
39.8 40.0 40.0 40.8 42.9 42.7 44.0 44.9 45.9 45.8 46.6
60.2 60.0 60.0 59.2 57.1 57.3 56.0 55.1 54.1 54.2 53.4
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 6:
Share of CP/NCDs down sequentially (%)
Banks
14
7
17
63
15
7
15
63
20
7
14
60
25
6
13
55
NHB
25
8
13
54
26
8
12
55
Repco Bank
20
8
9
64
15
7
8
69
10
8
7
75
NCDs/CP
9
9
10
73
10
8
11
71
7
8
10
Exhibit 7:
Asset quality trend (%)
GNPA
NNPA
75
Source: Company, MOFSL
Source: Company, MOFSL; 3QFY17 numbers excluding regulatory
forbearance
14 November 2019
6
 Motilal Oswal Financial Services
Repco Home Finance
Exhibit 8:
Financials – Valuation Matrix
66
Rating
ICICIBC*
HDFCB
AXSB
KMB*
IIB
RBL
Private Aggregate
SBIN (cons)*
PNB
BOI
BOB
Public Aggregate
Banks Aggregate
HDFC*
LICHF
PNBHF
REPCO
SHTF
MMFS
BAF
CIFC
SCUF
LTFH
MUTH
INDOSTAR
MAS
FY21E
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Neutral
Buy
CMP
(INR)
499
1,274
716
1,598
1,374
318
306
60
66
93
Mcap
(USDb)
43.7
95.7
27.9
42.6
11.8
2.0
38.1
3.9
3.0
5.0
P/E (x)
FY20E
FY21E
22.9
13.3
26.0
20.6
29.8
15.4
34.4
28.5
15.3
11.1
19.5
10.9
11.3
-12.3
-83.3
17.3
8.2
7.9
8.2
4.7
P/BV (x)
FY20E
FY21E
2.2
1.9
4.1
3.5
2.3
2.0
4.6
4.0
2.6
2.1
1.7
1.5
1.0
0.7
0.4
0.6
1.0
0.7
0.4
0.6
RoA (%)
FY20E
FY21E
1.1
1.6
2.0
2.1
0.8
1.3
1.9
2.0
1.9
2.2
0.8
1.1
0.5
-0.3
0.0
0.2
0.7
0.6
0.3
0.8
RoE (%)
FY20E
FY21E
10.1
15.7
16.8
18.4
8.4
14.0
14.1
15.0
18.6
21.1
8.9
14.4
9.7
-5.4
-0.5
3.2
13.0
8.5
4.7
12.0
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
2,225
420
541
289
1,138
328
4,212
309
1,330
96
712
181
719
52.9
2.9
1.3
0.3
3.6
2.8
33.2
3.2
1.2
2.6
3.6
0.2
0.5
22.5
7.5
6.6
6.0
8.9
13.0
39.9
16.8
8.1
7.7
10.7
7.3
22.3
16.6
6.9
6.0
5.3
8.2
9.9
31.4
14.4
7.5
6.8
9.3
5.5
18.2
3.3
1.2
1.1
1.0
1.4
1.7
9.7
3.2
1.2
1.2
2.6
0.5
3.8
2.5
1.0
0.9
0.9
1.2
1.5
7.6
2.7
1.0
1.0
2.2
0.5
3.3
1.9
1.3
1.6
2.6
2.7
2.2
4.1
2.3
3.7
2.3
6.4
2.0
4.5
2.0
1.3
1.7
2.6
2.6
2.5
4.0
2.3
3.8
2.5
6.5
2.7
4.6
15.8
16.3
17.4
18.1
17.2
14.0
27.2
21.0
15.7
16.8
26.2
7.3
19.4
15.9
15.6
16.4
17.3
16.0
16.4
27.2
20.4
14.9
16.5
25.2
8.8
20.2
Source: MOFSL
14 November 2019
7
 Motilal Oswal Financial Services
Repco Home Finance
Financials and Valuations
Income statement
Y/E March
Interest Income
Interest Expended
Net Interest Income
Change (%)
Other Operating Income
Net Income
Change (%)
Operating Expenses
Operating Income
Change (%)
Provisions/write offs
PBT
Tax
Tax Rate (%)
PAT
Change (%)
2015
6,695
4,317
2,378
24.6
235
2,613
24.3
547
2,065
20.5
203
1,862
631
34
1,231
12.1
2016
8,521
5,483
3,039
27.8
297
3,336
27.7
643
2,693
30.4
392
2,301
800
35
1,501
21.9
2017
10,141
6,463
3,678
21.0
318
3,996
19.8
676
3,320
23.3
518
2,802
979
35
1,823
21.4
2018
10,851
6,489
4,362
18.6
250
4,612
15.4
790
3,822
15.1
748
3,074
1,063
35
2,010
10.3
2019
11,634
7,200
4,434
1.7
318
4,752
3.1
984
3,768
-1.4
170
3,598
1,252
35
2,346
16.7
2020E
13,289
8,478
4,811
8.5
375
5,186
9.1
1,026
4,161
10.4
292
3,868
825
21
3,044
29.7
2021E
14,721
9,300
5,421
12.7
432
5,852
12.8
1,135
4,717
13.4
352
4,366
1,100
25
3,265
7.3
(INR M)
2022E
16,391
10,205
6,185
14.1
496
6,682
14.2
1,248
5,433
15.2
392
5,041
1,270
25
3,771
15.5
(INR M)
2022E
626
24,026
24,652
125,112
10.1
2,138
151,902
148,943
11.4
551
15.0
180
2,228
151,902
Balance sheet
Y/E March
Capital
Reserves & Surplus
Net Worth
Borrowings
Change (%)
Other liabilities
Total Liabilities
Loans
Change (%)
Investments
Change (%)
Net Fixed Assets
Other assets
Total Assets
E: MOFSL Estimates
2015
624
7,497
8,121
51,044
30.8
1,592
60,757
60,129
30.8
124
0.0
89
415
60,757
2016
625
8,923
9,548
65,379
28.1
2,705
77,632
77,049
28.1
124
0.0
93
366
77,632
2017
626
10,747
11,372
75,604
15.6
3,457
90,433
89,578
16.3
156
25.8
91
609
90,433
2018
626
12,459
13,085
81,343
7.6
2,882
97,310
96,492
7.7
239
53.5
135
443
97,310
2019
626
14,648
15,274
92,774
14.1
1,522
109,570
108,379
12.3
363
51.5
155
673
109,570
2020E
626
17,480
18,105
103,926
12.0
1,704
123,736
120,146
10.9
417
15.0
163
3,010
123,736
2021E
626
20,518
21,144
113,608
9.3
1,909
136,661
133,657
11.2
480
15.0
171
2,353
136,661
14 November 2019
8
 Motilal Oswal Financial Services
Repco Home Finance
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg Yield on Housing Loans
Avg. Yield on Earning Assets
Avg. Cost-Int. Bear. Liab.
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expended/Int.Earned
Other Inc./Net Income
Efficiency Ratios (%)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset Quality (%)
Gross NPAs
Gross NPAs to Adv.
Net NPAs
Net NPAs to Adv.
VALUATION
Book Value (INR)
Price-BV (x)
EPS (INR)
EPS Growth YoY
Price-Earnings (x)
Dividend per share (INR)
Dividend yield (%)
E: MOFSL Estimates
2015
12.5
12.6
9.6
3.0
4.5
2016
12.4
12.4
9.4
3.0
4.4
2017
12.2
12.2
9.2
3.0
4.4
2018
11.6
11.6
8.3
3.4
4.7
2019
11.4
11.3
8.3
3.1
4.3
2020E
11.6
11.6
8.6
3.0
4.2
2021E
11.6
11.6
8.6
3.0
4.3
(%)
2022E
11.6
11.6
8.6
3.0
4.4
15.9
2.28
64.5
9.0
17.0
2.17
64.3
8.9
17.4
2.17
63.7
8.0
16.4
2.14
59.8
5.4
16.5
2.27
61.9
6.7
18.2
2.61
63.8
7.2
16.6
2.51
63.2
7.4
16.5
2.61
62.3
7.4
21.0
61.2
19.3
63.7
16.9
63.8
17.1
62.6
20.7
59.5
19.8
61.6
19.4
61.2
18.7
61.3
791
1.3
298
0.5
2015
130.2
19.7
11.8
1.5
1,009
1.3
368
0.5
2016
152.7
24.0
21.6
1.8
2,328
2.6
1,227
1.4
2017
181.8
29.1
21.4
2.0
2,827
2.9
1,255
1.3
2018
209.2
32.1
10.3
2.2
3,791
3.4
2,100
1.9
2019
244.1
1.2
37.5
16.7
7.7
2.3
0.8
4,333
3.5
2,413
2.0
2020E
289.4
1.0
48.6
29.7
5.9
2.9
1.0
4,934
3.6
2,735
2.0
2021E
338.0
0.9
52.2
7.3
5.5
3.1
1.1
5,602
3.7
3,092
2.1
2022E
394.1
0.7
60.3
15.5
4.8
3.6
1.3
14 November 2019
9
 Motilal Oswal Financial Services
Repco Home Finance
Corporate profile
Company description
Repco Home Finance Ltd (REPCO) is a Chennai-
based housing finance company with a loan book
of over INR100b. It was established in 2000 as a
wholly owned subsidiary of Repatriates Co-
operative Finance and Development Bank (Repco
Bank). The Government of India owns 76.83% in
Repco Bank. REPCO primarily finances the
construction and/or purchase of residential and
commercial properties (individual home loans and
loans against property). It had a network of 170
branches and satellite centers as of March 31,
2019.
Exhibit 2: Shareholding pattern (%)
Sep-19
Promoter
DII
FII
Others
37.1
26.1
26.8
9.9
Jun-19
37.1
51.0
0.6
11.3
Sep-18
37.1
18.7
29.4
14.7
Exhibit 1: Sensex rebased
Exhibit 3: Top holders
Holder Name
HDFC TRUSTEE COMPANY LTD. A/C HDFC CAPITAL
FRANKLIN TEMPLETON MUTUAL FUND A/C FRANKLIN
INDIA CAPITAL FUND LIMITED
ADITYA BIRLA SUN LIFE TRUSTEE PRIVATE LIMITED A/C
DSP SMALL CAP FUND
Note: FII Includes depository receipts
%
Holding
7.1
6.2
5.9
5.7
4.4
Exhibit 4: Top management
Name
T S Krishna Murty
Yashpal Gupta
K Prabhu
Designation
Chairman & Independent Directo
Managing Director & CEO
Company secretary
Exhibit 5: Directors
Name
Dinesh Ponraj Oliver
L Munishwar Ganesan
R S Isabella
Name
G R Sundaravadivel
K Sridhar
V Nadanasabapathy
*Independent
Exhibit 6: Auditors
Name
G Ramachandran & Associates
S R Batliboi & Associates LLP
Type
Secretarial Audit
Statutory
Exhibit 7: MOFSL forecast v/s consensus
EPS
(INR)
FY20
FY21
FY22
MOFSL
forecast
48.6
52.2
60.3
Consensus
forecast
44.1
49.8
56.1
Variation
(%)
10.2
4.9
7.5
14 November 2019
10
 Motilal Oswal Financial Services
Repco Home Finance
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
14 November 2019
11
 Motilal Oswal Financial Services
Repco Home Finance
***************************************************************************************
*****************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
14 November 2019
12