Repco Home Finance

Focused on south India

March 11, 2014 5:00 IST | capital market
Headquartered in Chennai, Tamil Nadu, Repco Home Finance was promoted by the Repatriates Co-operative Finance and Development Bank (Repco Bank), a Government of India owned enterprise, in April 2000, to tap the growth potential in the housing finance industry. The company is registered as a housing finance company with the NHB (National Housing Bank), the housing finance regulator of India.

The company is engaged primarily in the business of financing the construction and purchase of residential and commercial properties including repairs and renovations (Individual Home Loans) and loans against properties.

As of December 31, 2012, it had 73 branches and 19 satellite centers located in Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Maharashtra, Odisha, West Bengal, Gujarat and the Union Territory of Puducherry. As of December 31, 2012, 77 of its branches and satellite centers were located in tier 2 cities and tier 3 cities, and at the peripheries of tier 1 cities, based on its belief that they are underserved by larger HFCs and banks.

In December 2007 Carlyle (First Carlyle Growth VI), an affiliate of the Carlyle group, infused Rs 76 crore into RHFL for a 49.98% stake in the company. Since September 30, 2012 Carlyle has transferred (i) 6,192,100 Equity Shares constituting 13.33% of the equity share capital of the company to WCP Holdings III; (ii) 4,639,434 equity shares constituting 9.99% of the equity share capital of the company to Creador 1 LLC. Further Carlyle and certain of its co-investors have transferred 1,289,100 equity shares in the aggregate constituting 2.78% of the equity share capital of the company to Mixon Holdings, Shardul Securities, Mr. Rohit Kothari, Pannalal C Kothari (HUF), GCIL Finance, Visaria Securities, Ashwin Kumar Kothari (HUF), Antique Stock Broking, Merit Credit Corporation, and Mr. Tejal Kothari. Post the aforementioned transfer of equity Shares, Carlyle currently holds 23.75% of the pre-IPO equity share capital of the company

Repco Home Finance outstanding loan portfolio has grown at a CAGR of 43.81% from Rs 655.08 crore as of March 31, 2008 to Rs 2802.15 crore as of March 31, 2012. Its outstanding loan portfolio as at September 30, 2012 is Rs 3097.80 crore. Loans to salaried and non-salaried borrowers constituted 47.29% and 52.71%, respectively, of its loan book as at September 30, 2012. The company believes that the non-salaried borrower base is under penetrated target segment. As of September 30, 2012, all outstanding loans are on a floating rate of interest.

The total long term borrowings (including current maturities of long term borrowings) and short term borrowings of the company, as at September 30, 2012 and March 31, 2012, were Rs 2735.28 crore and Rs 2486.04 crore respectively. The company sources funds for its business primarily through loans from banks, refinance from NHB and short term credit/overdraft facilities from promoter. As at September 30, 2012, Loans from scheduled commercial banks formed 44.4% of total borrowings while Refinance from NHB formed 44.33% and loan from promoter formed 11.27%. Capital Adequacy Ratio (CAR) stood at 15.94% as at September 30, 2012.

Its gross NPA ratio was 2.12% and net NPA ratio was 1.60% as at September 30, 2012. Its gross NPA was 1.37%, 1.21% and 1.24% and net NPA was 0.95%, 0.95% and 0.97% as at March 31, 2012, 2011 and 2010, respectively.

The company is coming out with an IPO to collect around Rs 259.38 crore at the lower band of Rs 165 per share and Rs 270.39 crore at the upper band of Rs 172 per share consisting of a fresh issue of 1.57 crore equity shares. Post-issue, promoters' stake will fall to 37.37% from 50.02%. The company has reserved 1.8 lakh equity shares for its employees. The employees are being offered a discount of Rs 16 per share.

The issue shall constitute 25.29% of the post issue paid-up capital of the company while the net issue (issue less the employee reservation portion) shall constitute 25%.

The company intends to utilize the net proceeds from the issue towards augmentation of its capital base to meet its future capital requirements arising out of growth in business


According to industry estimates, housing finance disbursements will grow at a CAGR of 16.3% between Fiscal 2012 and Fiscal 2016 to reach Rs 3734 billion by Fiscal 2016. Increase in demand for housing, rise in property prices and hence increase in average ticket size, and an increase in penetration levels are some of the key drivers behind the growth in disbursements in the housing finance industry.

Repco Home Finance outstanding loan portfolio has grown at a CAGR of 43.81% from Rs 655.08 crore as of March 31, 2008 to Rs 2802.15 crore as of March 31, 2012.

Revenue from operations has grown at a CAGR of 46.69% from Rs 68.86 crore in Fiscal 2008 to Rs 318.82 crore in Fiscal 2012

Profit after tax has grown at a CAGR of 45.47% from Rs 15.09 crore for Fiscal 2008 to Rs 67.56 crore for Fiscal 2012

Union Budget 2013-14 provided for an additional tax deduction of Rs 1 lakh on interest paid towards home loan upto Rs 25 lakh to be claimed in AY 2014-15 (over and above existing deduction of Rs 1.5 lakh). If the limit is not exhausted, the balance may be claimed in AY 2015-16. This shall boost housing demand in non-metros.


The housing finance industry in India is highly competitive.

Loans to non-salaried borrowers constituted a significant 52.71% of its loan book as at September 30, 2012 which could put pressure on its asset quality in adverse economic cycles.

The company is faced with a deteriorating trend in its profitability over the last two-three financial years. NIM has declined to 3.8% for H1FY'13 from 5.3% for FY'10 while spreads for the company have fallen to 2.9% for H1FY'13 from 4.4% for FY'10

Its gross NPA ratio was 2.12% and net NPA ratio was 1.60% as at September 30, 2012. This is much higher than gross NPA of 1.37% and net NPA of 0.95% as of March 2013. The company claims that as loans to non- salaried customers comprise a significant proportion of its outstanding loan portfolio, NPA levels vary during the year.

Company's branch network is highly concentrated in southern India and hence it is exposed to geographical risks. Branches in southern India accounted for 96.65% of its outstanding loan portfolio as at September 30, 2012. Branches in Tamil Nadu accounted for 63.65% of its outstanding loan portfolio as at September 30, 2012


Repco Home Finance annualized EPS for 6M FY 2013 on post-issue equity works out to Rs 11.5. At the price band of Rs 165 to Rs 172 P/E works out to 14.3 to 15.0 times.

Current book value of Repco Home Finance is Rs 73. Post-issue Book Value works out to Rs 96.2 and Rs 98 at issue price of Rs 165 and Rs 172, respectively. P/BV at both the bands works out to be 1.7 and 1.8 times, respectively. HDFC is trading at P/BV of 4.9, while LIC housing Finance is at 2.0, Dewan Housing Finance is trading at 0.9, GIC Housing finance at 1.2 and GRUH Finance at 8.2.

Repco Home Finance: Issue Details
No of shares fresh issue (in crore)1.57
Price band (Rs)165-172
Post-issue equity (Rs crore)62.16
Pre-issue promoter stake (%)50.02
Post-issue promoter stake (%)37.37
Issue open date13-03-2013
Issue close date15-03-2013
ListingNSE & BSE


Repco Home Finance: Financials
Particulars0803 (12)0903 (12)1003 (12)1103 (12)1203 (12)1209 (06)
Income from Operations68.86112.75163.54225.54318.82188.80
Other Income2.532.070.690.410.070.04
Total Income71.39114.82164.23225.95318.89188.84

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