Buy Repco Home Finance; target of Rs 690: JM Financial

Repco Home Finance (Repco ) reported 3 Q FY 18 earnings of  IN R 485 mn, up 5 % YoY. Loan growth moderated to 9.6% on account of i)  Sand Mining ban in TN after Madras High  Court’s order in Nov’17 ; i i ) sluggish LAP growth (flat YoY) with company focusing on low er ticket LAP iii) higher repayments due to increase in competition  and iv) slower growth outside  TN in Kerala, Karnataka and AP due to state specific issues.


We expect REPCO to deliver ROA of 2.2% and ROE of 16 % by FY20E. We value REPCO at 2.4 x  Mar ’ 20 BV, implying a Mar’19 TP of INR 690