Manish,
Repco had ROE of 25-26 in FY10 & 11 and ROE of 23 in FY12. So they will eventually reach figure of 25%. That combined with equity dilution and we are looking at a 25%+ grower for long term if they manage loan book and NPA well.
There are very few stocks we can take very long term view on and mortgage financiers are few of them. Gruh is 5K Cr Mcap now. But I remember even at 1500 Cr Mcap, we were discussing 40-50K Cr Mcap in 20 years figures for Gruh. And we stand by it so far.
Actually itâs a given that Repco will be a 25% grower in the days to come. The market is giving it a premium as compared to its other peers.
The question however is⌠does the premium have more room to grow? Gruh is trading at a good 5xBV whereas Repco is still languishing at 2.5xBV despite having (near) similar key performance indicators.
@shiv ranjan,
GRUH remains a class apart in all HFCs.
Plus the premium due to parentage of HDFC will always remain and I dont expect this gap to be bridged. Unless maybe a few quarters down the line, repco keeps growing faster than gruh.
regards
hitesh.
Gruh will always command a premium. Butâs itâs not traded on just PBV. The PBV of Gruh looks very expensive but if we look at other factors, we start understanding the high multiple.
1). It currently trades at 7-8 PBV FY14. But it also gives 35-40% of profits as dividends. If it starts trading at PBV of 4 the yield will suddenly jump to 2-2.5% which is high for a predictable 25% grower.
2). It partly trades on PE. And PE for FY14 looks much reasonable at 26-27. Since ROE = PB/PE, with high ROE companies, PB is much high for a normal PE. And this has been case with HDFC too (PB of 5 for many years).
I personally realized the high multiple bias with Gruh after few years and making 3 bagger in it on 2% portfolio allocation 
disc - no allocation to Gruh. 12% allocation to Repco.
Hello investors and Traders,
this is my first post here on valuepikr!!! i have been following this for 3-4 days and am amazed by the quality of discussions and great picks, together with the analysis.
I have one question in mind. regarding housing finance companies how would we compare repco, dhfl , and indiabulls finance⌠since repco and dhfl have run a lot recently, does it not make indiabulls housing finance an attractive bet which is trading cheap??
REgards,
John
Management quality is 1st priority. For NBFCâs asset quality comes on top too.
With Indiabulls, management quality is suspect. When market prices a housing finance company at 10% dividend yield, it definitely has something in mind.
@ John --I have created excel sheet comparing DHFC , GIC Housing , Can Fin , REPCO , GRUH. Any suggestions welcome.
Valuation perspective , all HFC looks cheap to me , so its question of selecting good company.
Recently my friend bought a house in Bangalore suburb & he got his loan from LIC Housing Finance. His home is B-Khata (means a construction not approved by BBMP or only registered with some local panchayat). Generally HFâs doesnât finance B-Khata properties. But LIC HF employees take 1% of the dispatching amount as under the bench commission & create some FAKE PAPERS that the person submitted papers to convert his property to A-Khata (means to register with BBMP) and will sanction loan. He says the same goes for Canfin Homes. But this is not possible with SBI or HDFC.
So it seems the Management)Employee)Loan quality of LIC HF & Canfin are reflecting in their stock p/e & may be market wonât assign higher p/e for these stocks!
So the main question is to know whether the same can happen with REPCO HF (like employees taking commission & sanctioning loans to dubious properties) as it is also a PSU.
May be friends fromTamilnadu will have some idea about this?
@Praveen - did your friend get loan with LIC HF or any PSU HF? Bcos my colleague had similar experience few years back in bangalore, my colleagueâs loan was rejected by a bank(dont exactly remember banks name, but i think its ICICI), few days later an agent approached him and told him his paper had problem(something related to BBMP)and agent will help to recifiy that if he pays Rs 5000 and some documents. My colleague paid amount and that agent never turned up and received his calls there aftr. When he FIR he came to know about a racket that claims to be bank agents and taking money from people.
If REPCO follows such practices then their NPA will deteriorate which seems to be not the case as of now.
@Augustine JosMy friend got the loan & even he occupied the new house. According to him he given the bribe directly to LIC HF officials, His land documents were clear but his house site is not registered with BBMP (or something like that). So this wonât be a NPA as itâs not a dubious property but just some unapproved layout. I think even LICHF wonât give loan if land title is not clear. He also said the same thing can be done with Canara Bank(so I implied it can be Canfin homes). He clearly said this canât be possible with SBI.
He also took one of his other friend for another loan in same manner & loan is under process.
He said even the RE brokers also do these things but they charge 1.5% of loan amount but it will be 1% if we approach officials directly.
p.s: This is not any accusation or pointing to any company. Just presented what I heard. Please do your own due diligence/enquires for any actions.
Disc:Own Gruh
This thread is actively participated by all. Lots of contradictory arguments passed and still passing.
Healthy discussion thread like Repco allows one to make better buy/sell decision.
repco daily chart shows a breakout from flag pattern.
explanation and targets etc described on chart.
Since the pattern is over medium term, targets have to be considered over medium term.
Axis bank has launched a home loan product for people earning less than 10k per month. Axis will be the first bank to get into this segment and is targeting 1000 cr disbursals a year. This might lead other banks to jump on this high growth segment and may prove to be a competition to repco and gruh.
Yes it is a flag pattern. Because the history of chart is short, it is not easy to recognise pole, but an expert eye(like yours) can easily spot it.
holding repco for long term shall pay well as people in india always have a mind set of having a single property on their nameâŚrepco has gud profitability , ROE , its in a niche segment.
Recently some share holders have sold the shares likeWCP HOLDING III
That was a good timely spot Hitesh. Had been consolidating around 315-320 levels for sometime now. Finally breaking out after sometime. Have been holding since some time now. In for the long haul.
Block deal of 37 lac shares of Repco on BSE @325.
sorry it is 27 lac shares.
