Repco Home Finance surges 25% in 2 days post solid Q4 results

Shares of Repco Home Finance surged 15 per cent to Rs 268.70 on the BSE in Tuesday's intra-day trade amid heavy volumes. In the past two trading days, the stock of the housing finance company has rallied 25 per cent after its standalone net profit nearly doubled at Rs 82 crore in the March quarter (Q4FY23). It had posted a net profit of Rs 42 crore in the year-ago quarter (Q4FY22).

Net interest income (NII) rose marginally by 3 per cent year-on-year (YoY) at Rs 155 crore. Net interest margin improved 30 bps sequentially to 5.1 per cent. Assets quality improved during the quarter, with gross non-performing asset (GNPA) ratio coming in at 5.77 per cent and NNPA at 2.99 per cent against 6.97 per cent and 4.86 per cent in the year earlier period, respectively.

Asset quality continued to improve gradually with a decline in GS-II and GS-III and increasing intensity in collection efforts. HDFC Securities expects it to decline further (target GS-II below 10 per cent).

"Portfolio growth gained traction from subdued levels (up 6 per cent YoY) with strong disbursals (39 per cent YoY, 20 per cent QoQ), driven by the activation of sourcing channels and improved payouts to employees. While the PPoP growth remained muted due to lower AUM growth and higher opex intensity, the recent investments in tech and employees are likely to reflect in improving throughput and asset quality," the brokerage firm said in result update.

Repco has delivered a healthy turnaround in operating performance under the new MD & CEO in FY23 after a subdued FY22. While the initiatives have aided in picking out low-hanging fruits, the sustenance of the improvement in loan growth and asset quality remains a key monitorable for any meaningful rerating in the stock, analysts said. The stock, however, is trading above the brokerage firm’s target price of Rs 260 per share.

At 02:56 PM, Repco was quoting 11 per cent higher at Rs 258.90, as compared to 0.17 per cent rise in the S&P BSE Sensex. It had hit a 52-week high of Rs 277 on August 25, 2022. Average trading volumes on the counter jumped nearly seven-fold with a combined 4.1 million equity shares changing hands on the NSE and BSE.