REPCOHOME - Repco Home Finance Limited Share Price

Management's outlook for Repco Home Finance remains cautiously optimistic, focusing on growth, asset quality, and strategic expansion. Key highlights include:

• Growth Targets: Targeting organic disbursements surpassing Rs.3,300 crore in FY25 and AUM reaching ~Rs.14,600 crore by March 2025. Disbursements are expected to improve in Q4 (Rs.950"“1,000 crore) as new sales teams stabilize and Karnataka regulatory disruptions ease.
• Asset Quality: GNPA reduced to 3.9% (Rs.546 crore) with a provision coverage ratio of 61.8%. Aiming to lower Stage 2 assets below 10% by March 2025. Systematic recovery efforts (auctions, OTS settlements) aim to reduce GNPA to ~Rs.520 crore by FY25-end.
• Profitability: Maintained NIM at 5.5% and spread of 3.7%. Net profit rose 7% YoY to Rs.107 crore. ROA/ROE at 3.1%/14.6%.
• Expansion: Branch network to reach 235 outlets by March 2025, focusing on Karnataka, Andhra Pradesh, Telangana, Maharashtra, and Tamil Nadu. DSA contribution at 42%, with sales teams driving 25% of disbursements.
• Strategic Shifts: Prioritizing housing loans (73.5% of book) over non-housing (26.5%) per NHB guidance. Cost of funds at 8.7%, with borrowing mix stable (82% banks).
• Challenges: Karnataka's regulatory changes temporarily impacted disbursements (~Rs.50 crore in Q3). Focus on scaling housing loans while managing competitive pricing and margin pressures.

Management remains confident in structural improvements (tech upgrades, process changes) to drive growth in FY26, targeting stronger AUM expansion and sustained profitability.

Question 1:
Rishikesh: "Sir, what is our disbursement and loan book target for FY '26? Any internal target we have that we currently are disbursing INR800 crores per quarter. If I'm not wrong earlier, we had a target of incrementally disbursing INR500 crores more every quarter. So, could you throw light on this number, please?"
Answer:
FY '26 targets are under discussion and will be finalized in a Board meeting. Management aims for "far better numbers" than current quarterly disbursements (~INR800 crores). Growth was limited in FY '25 due to prioritization of housing loans over non-housing and regulatory disruptions in Karnataka.

Question 2:
Kaustav Bubna: "Why were we confident of ~INR3,700 crore FY '25 disbursements but likely ending flat? What changes under the new CEO regarding growth vs. caution?"
Answer:
Flat growth stemmed from a strategic shift toward housing loans (64% of disbursements) over non-housing due to NHB guidance and Karnataka disruptions. The new CEO will maintain structural focus on cautious growth, with newer post-2022 loans performing well, ensuring stability.

Question 3:
Anand Mundra: "How much disbursement was impacted by Karnataka issues? Why low growth in Gujarat/Kerala?"
Answer:
Karnataka impacted disbursements by ~INR50 crores due to land-registry digitization delays. Gujarat growth was slow due to past issues but is reviving with new leadership. Kerala's low growth reflects a cautious approach to avoid high-risk loans.

Question 4:
Saurabh Dhole: "Why hasn't branch expansion translated to loan growth? Are new hires from microfinance a risk?"
Answer:
New Tamil Nadu branches contributed, but non-Tamil Nadu regions face slower scaling. Bulk repayments offset growth. Hiring focused on housing finance experience, avoiding microfinance talent, ensuring operational alignment.

Question 5:
Rudransh Kalra: "How do repo rate cuts affect our book? Fixed vs. floating rates?"
Answer:
90% liabilities are MCLR-linked, 10% repo-linked. Asset side is fully floating. Rate cuts pass through with a lag, preserving spreads (~3.7%). Minimal fixed-rate exposure limits volatility.

Question 6:
Mehul Pathak: "Given 50% LTV, what's historical write-off risk? Why low leverage despite high equity?"
Answer:
Principal write-offs are minimal (INR10-15 crores historically). High equity reflects conservative post-2019 strategies. Leverage (3.5x) balances growth and rating agency constraints (AA-).

Question 7:
Pratik Dedhiya: "How will NPAs reduce? Cost of expanding branches vs. growth?"
Answer:
Systematic recovery (auctions, OTS) aim to cut GNPA to ~INR520 crores by March. Branch expansion targets underpenetrated regions (e.g., Andhra, Maharashtra), balancing costs with long-term growth.

Question 8:
Rajiv Mehta: "Employee costs rose 30% vs. 50% headcount increase. Why?"
Answer:
Junior hires (sales/collections) kept cost growth lower. Attrition of senior staff offset expenses. Focus on experienced hires in housing finance ensured operational efficiency.

Question 9:
Sanjana: "BT-out trends? FY '26 disbursement guidance?"
Answer:
BT-outs (~INR100 crores/month) driven by banks' lower rates. FY '26 targets hinge on Karnataka recovery and new branch contributions, aiming for growth above FY '25's flat trajectory.

Question 10:
Rajiv Mehta: "NHB's push for housing loans"”how will mix/yields adjust?"
Answer:
NHB prioritizes housing loans. Incremental yields: housing loans 9.5"“10.1%, LAP ~12.5"“14%. Mix shifts may slightly compress spreads but align with regulatory expectations.