Repco Home Finance guides for 20% growth in sanctions in FY24 - Shares end 10% higher

Shares of Repco Home Finance ended another 10 percent higher on Tuesday, extending its gains from Monday's session, when they had risen by 8.5 percent.

The company in its earnings call said that it expects sanctions or disbursals to grow by 20 percent in financial year 2024, while loan growth is likely to be at 12 percent. The management also said that a turnaround in performance is expected in areas of Gujarat, Maharashtra, particularly in Pune, and Kerala.

Repco's management further said that it will look to raise rates on a monthly basis, if needed in order to support its Net Interest Margin. It expects NIMs for financial year 2024 to be between 4.8-5 percent, while spreads are likely to be between 3-3.3 percent.

Among some other takeaways, the management is targeting a reduction of Rs 100 crore in Gross NPAs, while it sees credit costs at Rs 25 crore for the full financial year.

For the March quarter, sanctions had seen a growth of 48.2 percent compared to the same period last year. The management said that the worst is over from the stress coming out of the restructured portfolio.

Brokerage firm HDFC Securities said that the recent investments made by the company in tech and employees are likely to reflect in improving throughput and asset quality. It has adjusted its financial year 2024 and 2025 forecasts higher to factor in lower credit costs. However, this may be partially be offset by lower loan growth. The brokerage has also revised Repco's price target higher to Rs 260 from Rs 238, while maintaining its Add rating.