Repco Home Finance Q1 Results Review - Slow Growth; Expect Demand To Recover In Q2: Nirmal Bang

Nirmal Bang Report

Repco Home Finance Ltd. reported set of numbers deviated from our net interest income/ pre-provision operating profit/ profit after tax estimates by plus 8.5% / plus 16.5% / plus 9.3% on account of higher other income and lower provisions.

Repco Home Finance is guiding for ~12% assets under management growth in FY25 led by higher disbursement volumes and market share expansion in non-TN states; we build 11%.

Q1 FY25 net interest margin stood at 5.1%; we expect it to trend in a similar range, aided by a lower cost of funds in H2. Expect opex to be elevated as the company invests in tech transformation and adds new centres/ employees.

While Q1 saw a slight deterioration in asset quality, the company continues to maintain dedicated focus on collection effort

We revise our FY25/FY26 estimates to account for better-than expected profit after tax in Q1. Roll forward our valuation to June 2026 at 1 times P/adjusted book value (versus 1.1 times earlier) with an unchanged target price of Rs 600.

Our multiple gives a premium of 31% over five year-average P/adjusted book value (of 0.8 times) accounting for improving asset quality trend. The Stock is trading at an attractive valuation of 0.9 times FY26E P/adjusted book value. Maintain 'Buy'.

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