RBI hiked FII limit in Repco to 49% as per BSE announcement : http://www.bseindia.com/xml-data/corpfiling/AttachHis/Repco_Home_Finance_Ltd_171014.pdf
Any take on Q2 numbers, didn’t have time to look for details
Key Metrics taken from ResearchBytes uploaded presentation
Looks in-line with MD's though process as per AGM notes, didn't check any analyst OR Market expectation
| Year/Ratios | Q2 FY15 | Q2 FY14 | Q1 FY15 | Q4 FY14 |
|---|---|---|---|---|
| NIM | 4.5% | 4.7% | 4.4% | 4.7% |
| Net NPA | 0.8% | 0.9% | 1.6% | 0.7% |
| ROAA (TTM) | 2.5% | 2.7% | 2.6% | 2.7% |
Q on Q Revenue increase as compared to last year Q2 is 31%.
Also H on H Revenue increase is also 31% compared to last year
New Norms by RBI for NBFC’s brings NPA on par with Banks
The Reserve Bank of India announced a revised framework for non-banking financial companies (NBFCs), raising the minimum net owned funds limit while capping deposit acceptance and aligning bad loan norms with banks, reports CNBC-TV18’s Latha Venkatesh. Among the important norms laid out in the framework: all NBFCs will have to take a certificate of registration for continuing business and they must have net-owned funds of at least Rs 1 crore by 2016 and Rs 2 crore by 2017. Rules have also been changed for asset finance companies, who until now could easily take public deposits – they now have to obtain an investment-grade rating from a rating agency but this rule too is applicable from March 2016. The most important ones, though, are the changes in the bad loan rules. As of now, NBFCs mark a loan as bad loan only if the interest is not paid for six months while for banks it is three months. Now NBFCs have to mark a loan as bad loan if the interest has not been paid for 90 days or 3 months. This, however, kicks in only by March 2018. As of now the six months remain for this financial year (FY15), for the next financial year (FY16), a loan is bad if it is not paid for 5 months, and it turns bad if not paid within 4 months in FY17. The RBI also raised the minimum net worth for asystemically-importanta NBFCs from Rs Rs 100 crore to Rs 500 crore. Deposit-taking NBFCs and systemically important NBFCs have to maintain 10 percent Tier I capital (out of 15 percent capital adequacy ratio). Earlier, NBFCs were required to maintain capital adequacy ratio of 15 percent, of which 7.5 percent was Tier I capital. This will have to be raised by 2017. The stricter norms are expected to weigh on NBFC shares in the immediate term even though the central bank has given time to comply with the changes.
It seems Mr M has decided to give Repco the same valuations as Gruh. In the mean time Gruh has also raced to some crazy 18 times P/B, Repco to 7 times P/B now, both trailiing fy 14. So either it could be bubble now in HFC or Mr M may wish to value these niche players on some other valuation parameters of p/e etc not p/b
Looking at these valuations Can fin looks damm cheap, with zero NPA and 40 % loan growth and P/B of 2.1 only.
Comments are welcome !
Gruh and Repco are valued on PE basis is what i understood. Gruh PE is 52, repco 36 (trailing)
now that the valuations have run up high …just like other companies…is it worth adding now?
)- Gruh will always trade at Premium Valuation than Repco (due to parentage pof HDFC)
@Santosh, we are 3 months short of FY15 so FY14 PB is past. Repco is trading at 5X+ FY15 PB and Gruh at 14X. But market is now valuing them on PE instead of PB. I think most of the HFC’s will give similar returns in 2-3 years period from current price.
Q3 results
Revenues: Rs.175.6 cr vs Rs.135.8 cr Q3 2014 - 29.27% increase
net Profit of Rs.30.74 cr against Rs.27.14 Q3 2014 - 13.26% increase
Any idea on what is “Deferred tax liability on special reserve”? It has taken away Rs.3.3 Cr out of PAT.
@swaminathan
Do read the foot notes attached to the results which is self explanatory. This is applicable since last three qtrs. Do make a habit to read the foot notes of the results and the annual reports of the company to get the updates. It is very important.
R. Varadarajan - Managing Director add the call:Highlights BY Capital Mkt;
- Loan book expanded 27% at end December 2014. Company expects 25-30% growth to be sustainable in the medium term.Sanctions increased 19% to Rs 524 crore, while the disbursement moved up 7% to Rs 475 crore in Q3FY2015. Disbursement in the loan against property (LAP) portfolio stood at Rs 90 crore and Rs 381 crore in Q3FY2015.The company expects full year disbursement growth at 20%.
- Loan book mix between home loans and LAP was 80.7:19.3 at end December 2014 compared with 82.5:17.5 at end December 2013.The customer mix between home salaried and non-salaried was 44.1:55.9 at end December 2014 compared with 45.5:54.5 at end December 2013
- Asset quality improved to 1.99% at end December 2014 from 2.03% at end December 2013, but deteriorated on sequential basis from 1.65% at end September 2014 mainly on account of seasonality.GNPAs for LAP book stood at 2.9%.
- Provision coverage ratio (PCR) declined to 42% at end December 2014 from 51.5% a quarter ago. The company has decided to reduce the PCR to support profitability. However, the company remains committed to improve PCR to 100% over next few years.
- Spread stood at 2.9% and a NIM at 4.5% in Q3FY2015. Company expects to sustain target of 3% spread and 4% NIM.LAP yield at 15.9% and housing loan yield at 12.1% was maintained with the weighted average yield at 12.8%.
- Return ratios declined marginally with ROA at 2.4% and ROE at 16.2% mostly because of provision for deferred tax liability.Capital adequacy ratio/CAR continues to be comfortable at 21.5%.
- During the quarter, the company has entered new state of Jharkhand. Retail network as on 30 December 2014, comprised of 97 branches and 40 satellite centers spread across 11 states and Union Territory of Puducherry.Company will be opening about 15 branches in a year with one-third new branches in non-southern region.
- The cost-to-income ratio stood at 20.5% for 9MFY2015, while excluding ESOP charged the cost-to-income ratio was lower at 18.2%. The company expects to reduce overall cost-to-income ratio to 17-18% over next 12-18 months.The company expects to improve the customer base to 1.5 million over next 2-3 year from current level of 1.2 million.
RBI eases norms for home loans for up to Rs 10 lakh…
R. Varadarajan - MD addressed the call:Highlights by Capital Mkt:
Loan book increased 29% to Rs 6013 crore at end March 2015, driven by healthy 27% surge in disbursements to Rs 2181.2 crore and sanctions by 32% to Rs 2398.9 crore in FY2015.The company expects to maintain above 25% loans growth in the medium term.The company proposes to strive to maintain loans growth and profitability with deeper penetration into existing markets as well as expanding to new market.
Sanctions zoomed 55% to Rs 835 crore and disbursement surged 47% to Rs 750.5 crore in Q4FY2015.
Loan book mix between home loans and LAP was 80.8:19.2 at end March 2015 compared with 81.3:18.7 at end March 2014.The customer mix between salaried and non-salaried was 43.2:56.8 at end March 2015 compared with 45:55 at end March 2014.
The average loan ticket size stood at Rs 12 lakh. An incremental ticket size was higher at Rs 17.4 lakh in Q4FY2015.The company has reduced the GNPA ratio to lowest level since it started the operations at 1.3% at end March 2015. The strong focus on recoveries has helped the company to record improvement in the asset quality.GNPAs for LAP book stood at 1.71% and that for home loans was at 1.22% at end March 2015.State wise GNPA position was Tamil Nadu 1.1%, Karnataka 1.2%, Andhra Pradesh 1.5%, Telangana 4.5%, Kerala 3.2% and Odisha 3% at end March 2015.
Provision coverage ratio (PCR) of the company improved sharply to 62.4% at end March 2015 from 42% a quarter ago and 51.5% a year ago. The company remains committed to improve PCR to 100% in next few years, while improving PCR to 75% by end March 2016.The standard asset provisioning stood at 0.4% for housing loans and 1% for LAP.Spread stood at 2.9% and a NIM at 4.5% in FY2015. Company expects to sustain target of 3% spread and 4% NIM.
As per the company, any benefit of decline in the cost of borrowings would be passed on to the customers after taking care of spread of 3% and NIM of 4%.Capital adequacy ratio/CAR continues to be comfortable at 21.5%.The company has added 15 branches in FY2015, while the company proposes to continue adding 15 branches every year.
The cost-to-income ratio stood at 21% for FY2015, while the company expects to maintain the cost-to-income ratio at 20-21%.
The customer base of the company stood at 57,415 at end March 2015.
The borrowing of the company stood at Rs 5104.4 crore at end March 2015. As per the company, Non-Convertible Debentures would dominate incremental borrowings source in FY2016.
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Is this is right time to add some more repco to one’s portfolio ?
Hi Seniors,
Any thoughts on REPCO management integrity? I was reading their IPO prospectus and found out this:
Certain investigations are pending against our erstwhile managing director and erstwhile executive director
and the outcome of such investigations, if adverse, may affect the reputation of our Company
The Central Bureau of Investigation (the “CBI”) had issued summons dated May 5, 2011 under section 91 of
the Criminal Procedure Code, 1973 which requisitioned information and documents in relation to the
remuneration of Mr. M. Balasubramanian (in his erstwhile capacity as the managing director of our Company
and of our Promoter). Thereafter, the CBI submitted a confidential investigation report to our Promoter in
relation to (i) the revision and payment of remuneration to M. Balasubramanian, in his capacity as the erstwhile
managing director (the “erstwhile MD”) of our Company and the Promoter, (ii) the payment of remuneration to
Mr. S.V. Balasubramanian, in his capacity as the erstwhile Executive Director of our Company (the “ erstwhile
ED”), and (iii) the erstwhile MD’s alleged improper sanction of certain loans from the Promoter to his relatives.
The total amount allegedly misappropriated by the erstwhile MD by claiming inter-alia excess pay, ex–gratia
payments, excess performance incentive and notional interest loss without the approval of our shareholders
xviii
aggregating to 8.97 million. Similarly, the amount allegedly misappropriated by the erstwhile ED by claiming ex–gratia payments and excess performance incentives was 0.32 million and the notional interest loss on the
aforesaid components was 0.13 million, aggregating to 0.45 million.
Further the erstwhile MD, in his capacity as the managing director of the Promoter, allegedly improperly
sanctioned certain loans from our Promoter to his relatives resulting in losses aggregating to 13.55 million to our Promoter. The CBI requested sanction for the prosecution of erstwhile ED under Section 19(1) of the Prevention of Corruption Act, 1988 (the “PCA”). This agenda was placed in the 56th meeting of the Board held on November 1, 2011 and the same was deferred to enable the Government of India to examine the matter. The MHA by its letter dated November 29, 2011 (No. 10/3/2003-RHS/MD) advised the Company to take necessary action to sanction the prosecution of the erstwhile ED. Further, the MHA by its letter dated January 16, 2012 stated that the continuance of the erstwhile ED would not be in the interest of the Company and advised that the matter regarding the removal of the erstwhile ED in addition to sanctioning his prosecution may be resubmitted to the Board for their consideration. The Board at its 57th meeting of the Board held on December 8, 2011 took cognizance of the allegations set out in the CBI Report and granted sanction for prosecution of the erstwhile ED for offences punishable under Section 120B read with Section 420 of Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(d) of PCA. The Board also recognised that the erstwhile ED had refunded an amount of 0.32 million to the
Company on October 29, 2011.
The Board recommended to the shareholders to accord sanction to the prosecution of the erstwhile ED for the
offences set out in the paragraphs above and resolved to convene an extraordinary general meeting at a shorter
notice. The shareholders, at the meeting held on December 8, 2011, accorded sanction for the prosecution of the
erstwhile ED under section 19(1) of the PCA. The ED tendered his resignation from our Company on February
2, 2012 with effect from February 29, 2012.
We have not received any further intimation regarding the matter from CBI or from any other regulatory or
judicial authority. We cannot assure you of the outcome of this matter and it may result in an adverse effect on
the reputation of our Company.
I spent some time to study the business model of Repco Home Finance.
You can read about my study here: https://goo.gl/Tls2cA
Regards,
Jana
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