We have revised our NII estimates by 0.7%/0.8%, PPOP estimates by 1.6%/1.8%, and PAT estimates by 1.6%/1.9% for FY20/FY21, respectively. We have retained Buy rating on RHFL, revising our target price to Rs424 (from Rs495 earlier) and valuing the stock at 1.4x FY21E P/BV.
In spite of an in line 1Q performance (higher but sub-par growth, seasonal NPA spike and higher LLPs) we reduce multiple to 1.5x (from 2x) for REPCO given deteriorating macros. Maintain BUY. Our TP is Rs 443.
Our concerns on Repco are, a continued subdued growth in TN, a late diversification outside home state followed by an aggressive growth and stickiness in NPA with inadequate provisioning. We see growth as the key to earnings revival, which we currently expect at a CAGR of 12% of FY19-21E; higher than build-in credit costs is the key risk to our already subdued earnings forecast. The recent correction provides an upside to our Target Price of INR 390. We have an Accumulate rating on the stock.
We are positive on RHF’s presence in an under-served market and grip on the self- employed segment. However, current challenges are likely to reset its near-term growth, which will moderate EPS growth. That said, post-correction, the stock is trading at 0.9x FY21E P/BV, rendering risk-reward favourable. Hence, we are upgrading the stockto ‘BUY/SP’ from ‘HOLD/SU’ with a TP of INR460 (unchanged).
We have revised our NII estimates by -7.9%/-10.7%, PPOP estimates by -18.1%/- 21.4%, and PAT estimates by -7.5%/-14.8% for FY20/FY21, respectively. We have retained Buy rating on RHFL, revising our target price to Rs498 (from Rs523 earlier) and valuing the stock at 1.6x FY21E P/BV.