REPCO Home Finance is a midsized Housing Finance Company (HFC), with
focus on the underserved self-employed segment. While the current operations of
the company are predominately concentrated in Southern market (90%), the
management intends to gradually venture into other geographies over the next 5 years. The target segment of REPCO is highly underserved and
this offers a growth potential for many years going ahead. Unlevered balance
sheet and stable NIM coupled with controlled credit cost should result in 26%
earnings CAGR over FY2016-19E. At the CMP the stock is trading at 2.7x it
FY2019 ABV. We have valued the stock at 3.5x its FY2019E ABV and
Recommend BUY with a Target Price of Rs825 over the next 12 months.
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