REPCOHOME - Repco Home Finance Limited Share Price

The management of Repco Home Finance provided a positive outlook during the Q1 FY2026 earnings call, reflecting confidence in the company's growth trajectory. They reported disbursements of Rs.829 Crores for Q1 FY2026, a notable increase from Rs.680 Crores in Q1 FY2025, while sanctions rose to Rs.907 Crores from Rs.727 Crores. The total Assets Under Management (AUM) reached Rs.14,690 Crores, up from Rs.13,701 Crores year-on-year.

Key forward-looking points include:

1. Targets for the Year: Management aims for disbursements of Rs.4,000 Crores and an AUM of Rs.16,200 Crores by the financial year's end. They plan to achieve a Gross NPA (GNPA) of 2.5% and maintain stage 2 numbers between 7-8%.
2. Branch Expansion: The company is set to add 14 new branches, with total branches and satellite centers potentially reaching 247 by year-end.
3. Asset Quality Improvement: Management highlighted that Gross NPA was reduced to 3.3% from 4.3% year-on-year, with net NPA at Rs.171 Crores (1.19%). A target to lower GNPA further to 2.5% by year-end was established.
4. Cost of Funds: The cost of funds was reported at 8.7%, with expectations of further reductions through diversified borrowing strategies, including raising Rs.500 Crores in the NCD market.
5. Employee Morale: Initiatives were taken to boost employee morale through promotions and training programs.

Overall, the management exuded confidence in achieving robust growth and improving asset quality while emphasizing strategies for sustainability and stakeholder engagement.

1. Question: "What is your target for AUM and disbursement and the gross NPA target you mentioned?"

Answer: My target for this financial year is to disburse Rs. 4,000 Crores and achieve an AUM of Rs. 16,000 Crores. We aim to reduce the gross NPA to 2.5%.

2. Question: "How do you plan to bring down the gross NPA to 2.5% from the current levels?"

Answer: We have introduced a collection vertical focused on monitoring NPA accounts. We've allocated recovery managers in regions to oversee these accounts, along with special One Time Settlement (OTS) schemes approved by the board. These initiatives are complemented by monthly mega auctions and collaboration with recovery agencies.

3. Question: "What criteria do you use when financing builders and at what construction stage do you offer financing?"

Answer: We only finance builders with proven records and only for RERA-registered projects. Funds are disbursed only after a minimum investment from the borrower. Our stringent APF norms ensure we mitigate risks involved with builder financing.

4. Question: "What steps are being taken to boost employee morale?"

Answer: We've conducted a promotion exercise and given annual increments higher than the previous year. Regular training programs are in place to improve employee knowledge. We aim to foster a motivated workforce through these initiatives.

5. Question: "What is your cost of borrowing guidance for the year?"

Answer: Our average cost of funds as of June 2025 is approximately 8.75%. We are actively working to reduce this through diversification into the NCD and PTC markets and expect to raise around Rs. 500 Crores in the NCD market this financial year.

6. Question: "Can you provide specifics on the sales and collection verticals and their contributions?"

Answer: The sales vertical has contributed approximately 22% to our overall growth, with each sales manager achieving an impressive productivity level. Implementing the collection vertical has allowed us to reduce bounce rates from 4-5% to now below 1%, showcasing its effectiveness in managing delinquencies.

7. Question: "Do you see any emerging stress in your asset quality from specific regions?"

Answer: We have not noticed significant deterioration in asset quality in Karnataka or other states. Current trends show stability, and we are managing the situation effectively with no notable increase in NPA stress.

8. Question: "How do you address the rising BT pressure from larger players?"

Answer: We are actively managing this by offering competitive interest rates and top-up loans to retain customers. Currently, our BT outflows are around Rs. 60-65 Crores, countered by BT inflows of Rs. 80-85 Crores.

9. Question: "Could you explain the rationale behind your technical write-offs and shifting provisions to stage 3?"

Answer: We shifted provisions from stage 1 to stage 3 as they were deemed unnecessary. For stage 3, we maintain a provision coverage ratio of around 65%, allowing us to provide reassurance to our lenders while ensuring we maintain healthy asset quality moving forward.

10. Question: "What steps will be taken if you reduce NPAs significantly by March 2026?"

Answer: We will evaluate the situation based on the actual numbers. If we successfully reduce NPAs, we might retain some of the provisions for contingencies while releasing excess provisions based on the financial situation at that time.