Target:₹447
CMP: ₹393.95
Repco Home Finance Ltd (RHFL) is one of the affordable housing finance companies that we think is well placed to capture this growth. It is a niche player in the small-ticket housing finance market. It focuses on under-served markets, especially the self-employed in Tier II and III cities. There has been noteworthy improvement in its performance in the past few quarters. New management has drawn down a concrete strategy for growth.
Comfortable capital adequacy levels and healthy profitability, balanced portfolio mix, robust risk management systems and processes, strong foothold in south India with an established track record, stable and experienced senior management team bode well to capitalize on underpenetrated mortgage financing opportunity in the country.
The company took various steps to recover in FY23, such as simplification of underwriting process, decentralization of powers, improving employee morale, bringing in a target-oriented culture in terms of sanctions, disbursements, asset quality, etc.
Though first quarters are generally weak for the company’s business, it has still displayed healthy YoY performance. Its loan book has increased by 6 per cent YoY, while disbursements are up 7 per cent YoY. In terms of profitability, its NII grew by 17 per cent YoY, while PAT grew by 44 per cent YoY.