There has been 33 percent weakness in Repco Home Finance in the last one year. The brokerage houses are bullish about this stock being offered at a discount.
New Multibagger Stock: If you are looking for a multibagger stock, then you can keep an eye on Repco Home Finance, a company related to home finance. This stock has lost 33 percent in the last one year. The brokerage houses are bullish about this stock being offered at a discount. The brokerage house is expecting more than double returns in this stock going forward. The special thing is that the company’s profit has fallen 60 percent in the December quarter, even after that the brokerage is positive about it. The brokerage house says that the normalization of cases of Kovid 19 epidemic and economic recovery will accelerate the business of the company. At the same time, the asset quality and loan book of the home finance company is also expected to grow.
Management focus on growth
Brokerage house Motilal Oswal says that loan book growth has been muted due to reduced disbursements due to Kovid 19. Margins are also under pressure. But the condition will change further. REPCO is still trading at 0.5 multiple of FY24E P/BV. The risk reward ratio is very favourable. The focus of the new management is on the growth of the company. Loan growth may be 7% CAGR during FY22-24E. The brokerage house has given investment advice in the stock with a target of Rs 320. This is 37 percent more than the current price of Rs 233. According to the brokerage, the business franchise of the company is currently undervalued, the stock is trading below FY23E book and 5x earnings.
Overseeing growth strategy and business initiatives
Brokerage house ICICI Securities has given investment advice in the stock and has reduced the target from Rs 650 to Rs 563. In terms of current price Rs 233, 141 percent return can be given. The brokerage says that the December quarter results of Repco Home Finance have disappointed. While provisioning has increased, concerns about asset quality also remain. The performance of the company has also been affected due to increase in credit cast. Disbursement declined by 19.5% on a yearly basis and 8% on a quarterly basis. The loan book has also come down. Although the company’s new CEO is going to join soon, after which the company’s growth strategy and business initiatives will be monitored. Earning momentum will be decided by these initiatives.
Results at a glance
Repco Home Finance’s profit fell 60 percent to 31.47 crores in the December quarter. Which was 79.60 crores in the same quarter a year ago. At the same time, the total income has also come down from Rs 359.75 crore to Rs 325.45 crore on an annual basis. Net interest income has come down from Rs 154.36 crore to Rs 149.16 crore.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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