Repco Home

Repco Home Finance Ltd  is a leading low to medium ticket size home loan financing company predominately based in tier 2/3 cities of southern India. Promoted by the State-owned Repco Bank Ltd in 2000, Repco has grown from strength to strength with its loan book clocking nearly 42 percent CAGR in the last 5 years.The compunded profit growth for past 5 years is about 40% and ROE is 22%. The company has maintained a robust NIM of 4.6 percent along with a healthy spread of  3.2 percent.

Repco has 102 branches and satellite centres, with ~90% located in Southern India.They are expanding footprint by selectively setting-up new branches in the states of Maharashtra, Gujarat, Odisha and West Bengal. Loans to salaried and non-salaried borrowers constitute 46% and 54% of loan book.The company has an Experienced board and management team with many of them being IAS officers.As of 31st december 2013, the company on an employee strength of 411 has a net worth of about 7000 million.The company has a net NPA of under 1.3%(2.3% same time last year).With strong focus on recoveries, there has been a continuous improvement in the asset quality over quarters.The interesting thing about Repco is that it has no exposure to developer loans.It sources 65% of its funds from banks and rest from NHB and parent bank

The company also considers IIR (Installment to Income Ratio) while lending and average IIR ratio since the last 5 years stands at 50 percent of the gross monthly income of borrowers. The company has, since

inception, written-off merely Rs3.9 crore as bad-debts out of its strong cumulative Rs3500 crore loan book

They has been able to successfully operate branches in tier 2 and tier 3 cities at low costs ensuring the commercial viability of such branches. The average breakeven period for branches in Tamil Nadu is less than 1 year whereas for others it varies between 18-24 months.

 The promoters hold nearly 38% in the company.Another 20% is in the hands of FII's and DII's. Funds like Citigroup,Reliance Capital and SBI are holding shares in the company. Going forward the demand for affordable housing and housing loans will increase in India. This gives Repco ample scope for aggressive growth. At the cmp of 308 rs, the stock is trading at a p/e of 18. But considering the consistent good results given by the company, one can look into the stock and add it into portfolio