Repco Home Finance

Discussion in 'Must-Read Interviews, Articles & News Items' started by Meenakshi Razdan, Jun 10, 2015.

  1. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

    Mar 19, 2015
    Likes Received:
    Article at

    Before valuing the business let’s first understand the thesis on which our valuation is going to hinge on. There is a shortage of 18.78 million homes. In 2015 RHFL had 57,415 accounts. If we assume that each account represents one home then RHFL current market share of homes is 0.31%. From the chart given below we can see that mortgage penetration in India is very low. From these two facts we can safely assume that there is a lot of room for future growth.


    With a reasonable exit multiple of two times book the market capitalization + dividends of RHFL in year 2025 will be around Rs 10,500 crores. Its current market capitalization is Rs 3,750 crores. If someone buys RHFL today and holds it for the next ten years then he would get a compounded return of around 11%. Given that lending business is prone to negative black swans, I need additional returns to commensurate for the risk incurred.
    stockjeet18 likes this.
  2. stockjeet18

    stockjeet18 Member

    Mar 21, 2015
    Likes Received:
    Very informative