Hello Sir,

Hope you are doing well.

Remember, in 2017-18, housing finance stocks were all the rage.

Repco Home Finance too was quite famous then and was frequently quoted about on various business channels.

However, the stock peaked out around Rs 900 in June 2017 and went as low as 90 in May 2020. Since then, the stock has recovered to around current levels of 375 and the business is also showing signs of turnaround.

Mr. K Swaminathan took over the charge as Managing Director and CEO of the company in Feb 2022.

Below, we have shared interesting insights from the Q1 FY 24 con-call of Repco Home Finance to understand the current situation and the outlook for the company. Hope you find the details useful for your own investments or to add the stock to your watch list.


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Repco Home Finance – Insights from Q1 FY 24 con-call of the company

– General Details

  • We were able to achieve a disbursement of Rs. 684 crores against Rs. 642 crores of Q1 FY23, registering a growth of 7%
  • It is worthwhile to note that the sanction and disbursements in Q1 of last year included a DA pool purchase of Rs. 70 crores while there was no such pool purchase in Q1 of FY24
  • Our AUM stands at Rs. 12,655 crores, increased by around 2% QOQ from the previous quarter of Rs. 12,449 crores
  • The ratio of exposure between non-salaried and salaried segments stood at 51.8% and 48.2% respectively
  • The share of non-housing loans, i.e., home equity stood at about 23.1% of the loan book and housing loans contributed about 76.9% of the book
  • We were able to reduce the GNPA from Rs. 719 crores to Rs. 695 crores which is 5.5% of the AUM and the net NPA stood at Rs. 338 crores at 2.8%
  • We have a total provision of Rs. 524 crores with a provision coverage ratio of 51.4% for the Stage-III assets
  • As of June 30, 2023, we hold Rs. 600 crores of restructured portfolio of which approximately Rs. 200 crores is in Stage III
  • Our NIM for Q1 FY24 was at 5.1% as against 4.6% in Q1 FY23. We continue to operate at a spread of 3.3%
  • Our average yield on incremental loan sanctioned rose to 11.56% in Q1 as compared to 11.08% in the previous quarter
  • As of June 30, 2023, we have 193 touch points across 12 states and 1 UT comprising of 159 branches and 34 satellite centers with additional 2 asset recovery branches

– Structural Changes

  • This Company was not having any sort of verticalization in place in all these years. This sort of verticalization we have started doing
  • In the last call, we told about a collection vertical that was implemented
  • In the current quarter, we have also started a sales vertical separately
  • Some portion of our existing staff we are going to earmark exclusively for selling to our customers, approaching new customers
  • Going forward, we will also be adding a credit vertical

– Why increase in contribution of Home equity loans

  • We do not actually target for non-home loans. Whatever is coming, we take
  • Second is reclassification – When we notice that there are more than 2 kitchens or it may be a place where he will be building a house; in addition, he will also be constructing a small shop in front of his house. Such things we classify under home equity
  • this classification, especially in the new software, we are very very clear – unless it is a pure home loan, we cannot classify under any other category

– BT Out

  • I am happy to announce that BT-outs are relatively less compared to BT-ins. There is a reversal in trend that we have noticed in the 1st Quarter
  • At the head office level, we are monitoring through our links with the central agencies like CIBIL who give us reports about the likelihood of our customer moving out. We try to contact them so that we prevent such BT-outs

– Guidance

  • We have given a guidance of around 4.7% or 4.8% of NIM
  • The way forward for FY24, we plan to stick to our guidance numbers of 20% growth in sanctions and disbursements and 12% AUM growth from FY23
  • Credit cost, around Rs 25 crore for FY 24
  • The GNPA numbers are planned to be brought down by at least Rs. 100 crores out of which we have already reduced Rs. 24 crores



Disclaimer: This is not a recommendation to buy/sell Repco Home Finance. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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