We recommended Repco Home Finance in Apr’13 at the price of Rs. 175. At the current market price of Rs. 429, it has delivered 145% returns since our first recommendation. At this stage, we recommend long term investors to add more stock to their portfolios. Our investment premise was based on the company’s presence under-served markets, well established credit appraisal procedures and focused management.

Over the past one year, Repco has delivered better than expected loan book growth at 32% and earnings growth at 37%. The management is investing heavily in building its rural branch network as well as its sourcing team to ensure that future growth is as profitable at the current growth. Considering the long term earnings visibility and attractive RoE profile, valuations at 2.6x FY16 book value are reasonable. The new Government’s focus on affordable housing will open doors to larger opportunities for niche housing finance companies such as Gruh Finance and Repco Finance. In this light, we recommend long term investors to further accumulate the stock with a three year horizon.

We recommend ADDING Repco Home Finance at Rs. 430 despite the gains of 145% in 15 months. We continue to remain fans of Repco Home Finance's structural growth story.

Share On