Repco Home Finance shares gain after BNP Paribas sees 79% upside

Repco Home Finance shares gain after BNP Paribas sees 79% upside

Shares of Repco Home Financegained more than a percent intraday on August 19 after global brokerage BNP Paribas retained its buy call on the stock on turnaround potential.

The research firm has a target price for the stock at Rs 556, implying 79 percent potential upside from current levels.

“We continue to believe in company’s turnaround potential and reiterated buy call, though there was seasonal weakness in asset quality in Q1FY20,” the brokerage said.

Delivery on FY20 loan growth and gross non-performing assets target remains key and the delivering on guidance will put company back on steady earnings growth trajectory, it added.

BNP Paribas said the improvement in Q2FY20 is a key for stock performance.

The housing finance company’s profit grew 2.3 percent year-on-year to Rs 62.3 crore and net interest income grew 6.8 percent to Rs 126.6 crore in the quarter ended June 2019.

The loan book increased 12.6 percent to Rs Rs 11,342.1 crore compared to year-ago with home loans growth at 12.2 percent YoY.

Asset quality deteriorated with gross non-performing assets rising to 4.2 percent in Q1 against 2.95 percent in the previous quarter and net NPA increased to 2.7 percent against 1.9 percent quarter-on-quarter.

The stock was quoting at Rs 312.50, up Rs 1.95, or 0.63 percent on the BSE at 1054 hours IST.