Repco Home Finance Q3 Review: IDBI Capital Maintains 'Buy' On The Stock, Lowers Target Price — Here's Why

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IDBI Capital Report

Repco Home Finance Ltd.’s disbursements de-grew by 12% QoQ led by issues in Karnataka state. Thus, AUM growth slowed to 7% YoY versus 8% YoY (Q2 FY25). Further, Management guided for AUM of Rs 146 billion by FY25-end, which is lower than the ~Rs 148 billion-150 billion guidance given in last quarter.

Net interest margins improved QoQ to 5.5% backed by improvement in yields. Company has increased the lending rate by 10 bps which supported the margins. Asset quality improved during the quarter with gross non-performing asset at 3.9% versus 4.0% QoQ due to better collections. Net interest income grew by 10% YoY led by improvement in NIMs. PAT grew by 7% YoY led by higher operating expenses (up 31% YoY). Thus, RoA declined to 3.1% vs 3.3% QoQ.

We revised downwards FY25/FY26 estimates and rolled over to FY27 estimates. We maintain “Buy” rating with new target price of Rs 430 (earlier Rs 595), valuing it at 0.7x P/BV FY27E.

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