REPCOHOME - Repco Home Finance Limited Share Price

In the recent earnings call held on May 19, 2025, management provided an optimistic outlook for Repco Home Finance Limited. The company targets an Asset Under Management (AUM) of Rs. 16,200 crores by FY '26, representing a 12% growth from Rs. 14,492 crores at the end of FY '25. They aim to achieve disbursements of Rs. 4,000 crores for the current financial year. Additionally, management has set an ambitious goal of reaching Rs. 25,000 crores AUM by FY '28, with a focus on quality growth and profitability.

Key forward-looking points indicated by management include:

1. NPA Reduction: The current Gross NPA is Rs. 473 crores (3.26% of AUM), and they plan to reduce it to below 2.5% by March 2026. The aim for Net NPA is to bring it down to below 1%.
2. Branch Expansion: Repco intends to open 14 new branches in FY '26, increasing the total count to 247 branches.
3. Recovery Efforts: Significant recovery initiatives, including extending special One Time Settlement (OTS) schemes and conducting mega auctions monthly, are expected to enhance performance and asset quality further.
4. Profitability Metrics: For FY '25, the net profit reached Rs. 439 crores, reflecting an 11% increase YoY, with a target to maintain a spread of around 3.2% and an expected reduction in the cost-to-income ratio, currently at 27.5%, by improving operational efficiencies.

Overall, management is confident in the growth trajectory, focusing on accelerated disbursements while maintaining asset quality through robust credit assessment processes.

Here are the summarized questions and answers from the Q&A section of the earnings call transcript:

1. Question by Vikas Kasturi: "Sir, we've seen slower branch growth. Will this affect future growth?"

   Answer: We acknowledge your concern regarding branch additions. We've been strategically focusing on branch-oriented channels rather than expansive physical locations. Our efforts are now pivoting toward building urban-oriented teams, which we believe will yield better results without strictly expanding our branch network.

2. Question by Vikas Kasturi: "What interventions are planned to reduce GNPA further?"

   Answer: We're intensifying recovery efforts with dedicated teams and strategies, including 4 SARFAESI auctions and special OTS schemes. Our target is to reduce GNPA below 2.5% by the year end. We've bolstered our Recovery Department significantly, and these initiatives are expected to yield positive results.

3. Question by Ankit Gupta: "How do you plan to reduce the BT-out ratio?"

   Answer: To enhance customer retention, we've implemented a policy allowing us to reduce interest rates by up to 2% and offer additional top-ups. Our initiatives have effectively reduced BT-out, with FY '25 figures showing BT-in at Rs.450 crores versus BT-out at Rs.300 crores.

4. Question by Ankit Gupta: "Where do you see credit costs for FY '26?"

   Answer: For FY '26, I anticipate a credit cost below 25-30 basis points, with a provision charge of around Rs.10-15 crores due to expected recoveries. Our credit cost normalization will be assessed later based on updated data.

5. Question by Kiran B: "What has changed that allows you to target Rs.4,000 crore disbursements?"

   Answer: We've strengthened our sales teams, especially in key regions, incorporated incentives for channel leaders, and recognize market opportunities to drive higher disbursements. We're geared up to achieve this new target based on improved sourcing strategies.

6. Question by Kiran B: "What are your expectations for NHB funding?"

   Answer: We've secured Rs.150 crores from NHB and are aiming for an additional Rs.500-700 crores. We meet the eligibility criteria and are optimistic about increasing our NHB funding to diversify our borrowing.

7. Question by Shubhranshu Mishra: "How do you ensure competitive payouts to DSAs?"

   Answer: Our payouts are in line with the market. We pay around 1%-1.2% for corporate DSAs. For builder segments, we're entering cautiously while keeping costs competitive. We aim to increase non-TN disbursement.

8. Question by Saikiran Pulavarthi: "What measures have you taken to rectify past asset quality challenges?"

   Answer: We have revamped our credit assessment processes significantly. Implementing various income assessment models and strengthening verification processes have enhanced our asset quality, supported by robust checks to avoid prior pitfalls.

9. Question by Catherine Gomes: "What guidance can you offer regarding the cost-to-income ratio?"

   Answer: Presently at 27.52%, we aim for a reduction of 60-70 basis points this year through various initiatives, though I cannot provide a firm number just yet.

These answers convey confidence in strategic pathways for growth, improvement in asset quality, and targeted financial performance.