Repco Home Finance reports higher first-quarter profit supported by asset quality improvements, but warns that ongoing pricing pressures and competition may narrow margins in the coming months, prompting plans for strategic cost management and geographic expansion.
Repco Home Finance said its first-quarter profit edged higher even as competition from banks and other lenders put pressure on pricing, with management warning that margins could narrow slightly in the months ahead. According to the company’s earnings-call highlights published by GuruFocus, net profit rose to ₹114 crore in the June quarter from ₹108 crore a year earlier, while the net interest margin held at 5.4% and the spread stayed at 3.4%.
The lender also reported an improvement in asset quality on a year-on-year basis, although the picture was less favourable sequentially. Livemint reported that gross non-performing assets were ₹427 crore at the end of the quarter, down from ₹485 crore a year earlier, but slightly above the previous quarter’s level. The gross NPA ratio was 2.7%, while the company said recoveries were continuing across stressed accounts and that it expects to bring the ratio below 2% by March 2027.
Repco’s management remains confident of meeting its full-year targets despite a flat first quarter. The company told analysts it is still aiming for ₹5,000 crore in disbursements and 13%-14% growth in assets under management in FY27, and said July and early August activity had returned to expected levels after routine staff transfers and promotions disrupted operations in the April-June period. Arthneeti reported that loan sanctions and disbursements have been growing strongly on a broader basis, with the company also targeting an AUM level of about ₹18,000 crore.
Pricing pressure, however, is likely to remain a drag. Management said it may need to offer concessions to retain good customers and counter balance transfers out to rivals, and flagged a possible 10 to 12 basis point squeeze in spread in the coming quarters. It also pointed to the benefit of a ₹600 crore refinance facility from the National Housing Bank, of which ₹106 crore has already been drawn, as well as ongoing talks with bankers to trim borrowing costs.
The company’s cost of funds remains materially above that of large banks, which benefit from low-cost current and savings account deposits. Repco said it serves a different borrower base, including customers without formal income proof, and relies on a risk-based pricing model rather than trying to match the cheapest home-loan rates in the market. Management also said there are no plans to diversify beyond housing finance, and that the focus is on strengthening the core business through technology upgrades, specialised collections teams and expansion outside Tamil Nadu, particularly in Andhra Pradesh, Telangana and Karnataka.
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