India Equity Value investor, Trivikram Consultants

Prashant Vaishampayan

India Equity Value investor

Picking Long Term Multi-bagger stocks

Trivikram Consultants

Trivikram Consultants is an equity research service founded by Prashant Vaishampayan, a registered Research Analyst with SEBI in India. Prashant has done equity research since 1992.  He worked with Jardine Fleming, SG Securities, UBS and Kotak Securities. Since 2010, he is managing his portfolio and doing outsourced equity research for institutional clients. A team of six professionals helps him in equity research. We focus on pharma, agro-chemicals, auto and auto components, banks and financial services, specialty chemicals and niche manufacturing sectors.   

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/9677" target="_blank" data-smartkarma-citation="entities:9677:1">Repco Home Finance (REPCO IN)</a> 2QFY19 results were in line with our estimates. The outstanding loan book portfolio reflected 11% YoY growth (v/s our expectation of 12%) at Rs 103,820 mn. The Net Interest Income (NII) was Rs 1,154 mn (v/s our estimates of Rs 1,230 mn), reflecting a YoY decline of 5%. The PAT was Rs 670 (v/s our estimates of Rs 618 mn), reflecting a YoY decline of 4%.</p>
<p>The management stated that the sand mining issue in Tamil Nadu (TN) (58.4% of outstanding loan book as of 1HFY19) lasted longer than expected. This has led to lower construction activity and demand for housing loans in Tamil Nadu. The company has guided for an improvement in 2HFY19 with the target of 15-16% loan growth.  They are focusing more on the other markets like Maharashtra, Gujarat, Karnataka to grow the loan book.</p>
<p>We have revised our NII estimates by -5.3%/-5.2%/ -1.5%, PPOP by -7.3%/-7.2%/-5.1% and PAT by -3.5%/ -3.5%/-1.9% for FY19E/FY20E/FY21E respectively.  We have revised our P/ABV multiple from 2.3x to 1.9x. Applying it to the adjusted book value for September-20E of Rs 306 per share, we arrive at the fair value of Rs 570 (earlier Rs 630)  for the next 12 months.</p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 342.523px;">
<p><strong>Particulars </strong></p>
</td>
<td style="text-align: right; width: 112.477px;">FY18</td>
<td style="text-align: right; width: 91px;">FY19E</td>
<td style="text-align: right; width: 97px;">FY20E</td>
<td style="text-align: right; width: 97px;">
<p><strong>FY21E</strong></p>
</td>
</tr>
<tr>
<td style="width: 342.523px;">
<p>Adjusted book value (ABV) Rs</p>
</td>
<td style="text-align: right; width: 112.477px;">195</td>
<td style="text-align: right; width: 91px;">225</td>
<td style="text-align: right; width: 97px;">271</td>
<td style="text-align: right; width: 97px;">334</td>
</tr>
<tr>
<td style="width: 342.523px;">
<p>P/ABV (x)</p>
</td>
<td style="text-align: right; width: 112.477px;">1.7</td>
<td style="text-align: right; width: 91px;">1.5</td>
<td style="text-align: right; width: 97px;">1.2</td>
<td style="text-align: right; width: 97px;">1.0</td>
</tr>
<tr>
<td style="width: 342.523px;">
<p>RoE</p>
</td>
<td style="text-align: right; width: 112.477px;">18.5%</td>
<td style="text-align: right; width: 91px;">16.9%</td>
<td style="text-align: right; width: 97px;">16.6%</td>
<td style="text-align: right; width: 97px;">17.0%</td>
</tr>
<tr>
<td style="width: 342.523px;">
<p>RoA</p>
</td>
<td style="text-align: right; width: 112.477px;">2.4%</td>
<td style="text-align: right; width: 91px;">2.3%</td>
<td style="text-align: right; width: 97px;">2.2%</td>
<td style="text-align: right; width: 97px;">2.4%</td>
</tr>
</tbody>
</table>
<div class="content-caption">Source: Trivikram Consultants research as of 12th December 2018</div>

Repco Home Finance (REPCO IN) 2QFY19 results were in line with our estimates. The outstanding loan book portfolio reflected 11% YoY growth (v/s our expectation of 12%) at Rs 103,820 mn. The Net Interest Income (NII) was Rs 1,154 mn (v/s our estimates of Rs 1,230 mn), reflecting a YoY decline of 5%. The PAT was Rs 670 (v/s our estimates of Rs 618 mn), reflecting a YoY decline of 4%.
The management stated that the sand mining issue in Tamil Nadu (TN) (58.4% of outstanding loan book as of 1HFY19) lasted longer than expected. This has led to lower construction activity and demand for housing loans in Tamil Nadu. The company has guided for an improvement in 2HFY19 with the target of 15-16% loan growth.  They are focusing more on the other markets like Maharashtra, Gujarat, Karnataka to grow the loan book.
We have revised our NII estimates by -5.3%/-5.2%/ -1.5%, PPOP by -7.3%/-7.2%/-5.1% and PAT by -3.5%/ -3.5%/-1.9% for FY19E/FY20E/FY21E respectively.  We have revised our P/ABV multiple from 2.3x to 1.9x. Applying it to the adjusted book value for September-20E of Rs 306 per share, we arrive at the fair value of Rs 570 (earlier Rs 630)  for the next 12 months.




Particulars 

FY18
FY19E
FY20E

FY21E




Adjusted book value (ABV) Rs

195
225
271
334



P/ABV (x)

1.7
1.5
1.2
1.0



RoE

18.5%
16.9%
16.6%
17.0%



RoA

2.4%
2.3%
2.2%
2.4%



Source: Trivikram Consultants research as of 12th December 2018

REPCO Home – 2QFY19 – Focus on LAP to Maintain the NIMs and Spread