Repco Home Finance Q2 Results Review - NIM Expansion Positive; Strong Focus On Asset Quality: Nirmal Bang

Nirmal Bang Report

Repco Home Finance Ltd. reported an improvement in earnings, which came in higher than our estimate, driven by net interest margin expansion and lower provisions. Profit after tax grew by 38% YoY (10% QoQ) to Rs 981 million.

The management reiterated its guidance of achieving 12% assets under management growth. We expect 10.6% due to a weak H1, higher repayment trajectory and rising competition in the segment.

NIM expanded by 30 basis points QoQ (70 bps YoY) to 5.4% and we expect FY24 NIM of ~4.7%. Opex continues to be elevated as Repco Home Finance invests in tech transformation.

Dedicated focus on asset quality improvement over the past eight quarters has led to gross/net non-performing asset at 4.9%/2.2%. With healthy stage three expected credit loss provisions of ~57.4%, there is a possibility of write-backs as the asset quality improves.

We revise our estimates to account for a lower NIM and elevated opex. Maintain 'Accumulate' on Repco Home Finance with a target price of Rs 420, valuing it at 0.8 times September 2025E adjusted book per share.

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