Capitaline

Analyst Meet / AGM 16-Nov-17

Conference Call

Repco Home Finance

Expects to maintain spreads of 3% for next three years

Repco Homes Finance conducted conference call on 15 November 2017 to discuss the financial performance for quarter ended September 2017. R. Varadarajan - Managing Director addressed the call:
Highlights:

As per the company the impact of stay order of Madras High Court on registration of certain properties is behind now and the company has returned to normalcy in operating performance.
The company has recorded strong 37% surge in disbursements on sequential qoq basis to Rs 752.5 crore and sanctions jumped 23% to Rs 764.5 crore in the quarter ended September 2017.
The home loan disbursements surged sequentially to Rs 612 crore in Q2FY2018 from Rs 452 crore in Q1FY2018, while disbursements in the LAP segments also galloped to Rs 141 crore in Q2FY2018 from Rs 97 crore in Q1FY2018. The sanctions stood at Rs 618 crore in the home loans and Rs 146 crore in LAP segment in Q2FY2018.
The loan book of the company expanded 10% to Rs 9321 crore end September 2017 from Rs 8469 crore end September 2017.
With expectation of Rs 1800 crore disbursements for H2FY2018, the company is hopeful of achieving 20% loan growth for FY2018.
The loan mix between salaried and non-salaried segment was steady at 40-60, while the loan mix between home and LAP segment improved in favour of home loans segment at 81-19 end September 2017.
The incremental ticket size stands at Rs 16 lakh in the LAP segment.
An incremental yield on home loans is 9.8% (9.3% for salaried home loans and 10.3% for non-salaried home loans), while outstanding home loan yield stands at 11.3%.
LAP book showed improvement of 40 bps in incremental yield to 13.5%, while outstanding book yield stood at 14.3%.
The company expects spread to be maintained in the range of 3.2-3.3% for FY18, while guides at spreads of 3% for next three years.
As per the company, the high cost NCDs of Rs 500 crore are scheduled for maturing over next 12 months, which would provide interest savings of 130-140 bps on them.
NII improved 21% and net profit moved up 22% in the quarter ended September 2017. The company has improved spreads of 3.4% and NIM of 4.8% in Q2FY2018 from 2.9% and 4.3% in Q1FY2018.
The company has showed one of the lowest cost-to-income ratio of 15% in Q2FY2018. Meanwhile, the company expects to contain cost-to-income ratio at 16% in FY2018.
The company has substantially improved gross NPA ratio of the company increased to 3.4% end September 2017 from 4% end June 2017. The company to further reduce gross NPA ratio to 2% by end March 2018.
The interest income reversals stood at Rs 2.5 crore, while the company has also recovered interest income of Rs 2.5 crore from NPA accounts in Q2FY2018.
The company has written off loans of Rs 40 lakh in Q2FY2018 and Rs 6.5 crore so far in the past 14-15 years.
The provision coverage ratio stood (PCR) at 44.2% and September 2017, while the company proposes to PCR to 70% by March 2018.
The capital adequacy ratio of the company was at comfortable level of 22.1% and September 2017.
The company has network of 129 branches and 31 satellite centers end September 2017, while the company proposes to add another 7-10 point of presence in H2FY2018 in state of Tamil Nadu, Andhra Pradesh, Gujarat, Maharashtra and Madhya Pradesh.

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