REPCOHOME

: Affordable Housing Play at Deep Discount

, focused on the affordable housing segment (average ticket size ~₹15 lakh), has long trailed industry loan growth due to high run-downs in its legacy portfolio. Despite subdued growth, the stock has delivered strong returns over the past year, supported by attractive valuations and improving asset quality. With disbursements picking up and stress easing in key geographies, Repco is positioned for a gradual turnaround. Financial & Operational Performance - Q3FY26: Loan book growth ~9% YoY; disbursements up 40% YoY, sanctions up 35% YoY. - ROA dipped below 3% in 9MFY26 (vs. 3.1% in 9MFY25) due to higher operating expenses. - Asset mix: 71% housing mortgages, keeping asset quality relatively stable. - Provision coverage ratio (PCR): ~53%, providing cushion against stress in self-employed customer base (~53% of mix). Asset Quality Trends - Gross Stage 3 (NPA): 2.9%, improved by 100 bps YoY. - Gross Stage 2: 8%, down 260 bps YoY. - Early delinquencies improving; GS2 ratios expected to decline 200–250 bps annually in medium term. - Sustained improvement in collections and provision write-backs to support profitability. Growth Drivers - Management guidance: Disbursements to reach ₹4,000 crore in FY26, ₹5,000 crore in FY27. - Geographic expansion into non-core high-growth states (Maharashtra, Telangana). - Upgradation of sales verticals and sourcing channels to boost growth. - Strong pricing power in Tamil Nadu (57% of AUM), aided by high-yield home equity mix and lower funding costs. Valuation & Outlook - Current valuation: 0.5x FY28E P/B, at a deep discount to peers. - Aptus Value trades at 1.5x, Home First at 1.8x, Aadhar Housing at 2x FY28E P/B. - Re-rating hinges on steady loan growth and sustained asset quality improvement. - Risks: Geographic concentration and exposure to vulnerable customer segments. - Suitable for investors with higher risk appetite, given potential upside from sectoral tailwinds and improving fundamentals.