REPCO HOME FINANCE – Asset quality retains strong turf; growth healthy: Edelweiss

Repco Home Finance’s (RHF) Q4FY14 PAT of INR315mn (up 14% YoY) came broadly in line with our estimate. While PAT growth optically seems lower at 14% YoY when compared with run-rate of 50% in 9mFY14, the vector driving the same is increase in provisioning coverage to 50% plus. Overall, the business metrics continue to impress with: 1) 32% loan growth at INR46.4bn aided by similar growth rate of disbursements; 2) healthy asset quality with GNPA dropping by 60bps to 1.5% (seasonal in nature); and 3) NIMs maintaining robust 4.6% mark. The potential to grow manifolds in an under-served market underpinned by sufficient CRAR of ~25% will sustain RHF’s loan CAGR of 27% plus and help it post impressive 28% plus earnings CAGR, 2.7% RoA/~19% RoE over FY15/16. Maintain ‘BUY’ with TP of INR480 (assigning 3x FY16E P/ABV).

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