REPCO home finance

(Excel Monkey) #1

Unable to post tables as i am posting from my mobile therefore.

But these links would give you a fair idea about the company

REPCO has second highest margins in the industry after gruh and is being offered at a discount to gruh

(Vinod MS) #2


I had read reports by some esteemed organisations and really felt bad at such attempts to misguide retail investors.

This com is offered at P/B of 2.6 times, P/E of 11.3 times. Its gross NPA is 2.1!!! This is a highly risky loan book as even the worst companies in the housing sector will have lower NPAs. Canfin and DHFL have gross NPA below 1 and is going at less than half the P/B ratio of Repco.

And to compare it with a com like GRUH which has such promoter credentials, superlative NIM and performance track record is reallymalicious. Why aren’t these brokerage houses selecting the right peers for comparing this com - Canfin and DHFL?

Repco looks over priced and is best avoided.


(Excel Monkey) #3

Vinod the post money fy2013 P/B is 1.75

I think the business is more comparable with Gruh targeting non salaried borrowers

though it should quote at a discount to pedigreed gruh

(Vinod MS) #4

Excel, its not just pedigree, look at the NIM and gross NPA of both cos. They shouldn’t be compared. The difference in NPA alone makes themincomparable. For a housing finance com high NPA means there is really something wrong. House is a strong asset if adequate duediligenceis done and with currentsecularizationlaws institutions have more teeth in recovering the loan. But still if you manage high NPAs you are lending against weak assets, or there are more people giving you fraud land documents. And this high NPA is inspite of the com claiming that its funding only 65% of the property value. Then the reported property value itself is suspect.

Its like saying there is this great com so if we get a bad com at steep discount its fine.

Even gold loan cos are better than Repco with even higher NIMs.

Just my thoughts


(Vinod MS) #5

Hi, pls read the term “secularization” as “securitisation” (SARFESI act which helps banks sell asset in case of default)

(Excel Monkey) #6

Vinod this is the only stock which comes closest to gruh in terms of ratios. A sharp jump in NPLs yoy is a concern.

I would rate dewan as a lower quality play as compared to REPCO the only respite for dewan is low valuations.

(Raj Panda) #7

This is what the company has to say about the NPA

“I cannot give a forward looking statement. However, I can just say that these NPAs are more technical in nature as far as my company is concerned. I am serving a non-salaried segment where the income profile may be lumpy because they get good income in some months and not so good in some months. However, what I have found is ultimately they come and pay, so the company is very confident about managing the NPA.”

(CommonStocks) #8

The way I look at it, Increasing NPA just before the IPO means that the management has made no attempt to dress up the book before the suitors arrived.

(Subash Nayak) #9

I am yet to find a reason why should I invest in Repco, when I have solid under-valuation-cum-turnaround play in Can Fin, and low-NPA, solid persistence performer as GRUH.

(Raj) #10

It’s the same logic people had to invest in Lovable thinking that it would be the next Page industries :slight_smile:

(Excel Monkey) #11

Can fins segment has a lot more competition. Gruh and repco operate in priority sector space

(JatinK) #12

Yes NPAs are higher at 2+% BUTan asset becomes NPA if it doesn’t pay for 90 days.

Remember collateral (House) is still there for the company. Since it lends more than 50% to non- salaried class, this kind of NPA is possible… But they may not turn into lossesfor Repco.

Gruh is too good-- look at its consistent performance but at P/B of 10 we are putting 90% of money for future book.

Repco has grown at 40% CAGR for past 5 yrs, & at PB of <2… looks attractive to me.

Views invited.

(Excel Monkey) #13

Jatin there is divergence in NPLs of gruh and repco.

Gruh is doing something right which repco has not been able to

Probably the credit risk management in gruh is far superior

(Subash Nayak) #14

Can fins is a turnaround play/undervaluation play. Hence it is considered as a short/medium term investment, and not a long term investment. Everyone knows there are many player, but that is not the hindrance for investing in here.

I am yet to find a reason why should I invest in Repco, when I have solid under-valuation-cum-turnaround play in Can Fin, and low-NPA, solid persistence performer as GRUH.

(Vinod MS) #15


DHFL is of better quality than Repco on most parameters.

Its gross NPA is some 0.7% which again is far far superior than 2%+ of Repco. Management quality wise I cant find any reason for Repco to have a better rating. DHFL is a better known brand, has far superior branch network and presence of institutional investors of high repute.

If Repco is operating in a space which “technically” gives it higher NPAs then its better we invest in cos which operates in same industry without such an issue. For NPA above 1% the NIM should be atleast 5% to justify the higher risk.

Magma Fincorp operating in similar sector with possible “technical” NPAs has a gross NPA of 1.33%, NIM of 5%+ and P/B of 1.33. This even after having a loan book consisting of riskier loans in auto segment.

We know hardly anything about the Repco management, lets see how they expand using the IPO sum and grow their loan assets without compromising on quality. For now there are better cos IMHO



(Excel Monkey) #16

All I am saying is that REPCO faces less competition in its business

I am not disqualifying can fin. Even commodity business lie vanilla housing finance can generate decent returns supported by growth

Can fins segment has a lot more competition. Gruh and repco operate in priority sector space

(Excel Monkey) #17


except on NPA REPCO stands taller to DHFL.

To avoid confusion look at the ratios like ROA which takes into account NPA is far superior for REPCO

Another second derivative ratio ROE again is superior for REPCO that too on lower leverage


(Excel Monkey) #18

REPCO not getting a very good response from the market but looks like the issue would sail through

(JatinK) #19

Lets not be judgemental here about what’s better than Repco & what’s not.

Request someone to do an analysis of Repco & its competitors on imp factors like-

NIM, Sales growth- 3 yrs & 5 yrs, Loan book growth- 3 yrs & 5 yrs, NPA, Capital %, PB, PE, Mcap to Loan Book etc…

(Excel Monkey) #20

i have all the comp ratios

Can not post because I will have to first convert the PDF to word