Both Gruh Finance and Repco Home Finance have carved a niche market for themselves in select geographies
13-May-2014
Gruh Finance
This subsidiary of HDFC is known for its excellent credit evaluation of its customers. It is for this reason that its NPAs are close to nil. Gruh has witnessed strong growth in its book value and has maintained quality of its assets. An active player in Gujarat and Maharashtra, it has a valuable board and commands a premium valuation in terms of price to book.
| Outstanding Loan Book | Loan Disbursements | Operating income | NII | PAT | Net worth | Debt |
| 5438 | 2174 | 22 | 218 | 146 | 491 | 4915 |
| 0.271 | 0.35 | 0.331 | 0.265 | 0.307 | 0.221 | 0.216 |
Repco Home Finance
Promoted by Repco Bank which is a Government of India unit, the company was listed in 2013. The company focuses on home finance for individuals and is going through very high growth. A relatively small loan book is allowing it to capture a major chunk of the market. The company has its major business interest in the four southern states of Tamil Nadu, Kerala, Andhra Pradesh and Karnataka.
| Outstanding Loan Book | Loan Disbursements | Operating income | NII | PAT | Net worth | Debt |
| 3545 | 1167 | 406 | 126 | 80 | 623 | 3065 |
| 0.375 | 0.285 | 0.377 | 0.357 | 0.312 | 0.416 | 0.378 |
There are many similarities: both companies have similar customer profile who are non-salaried and both have seen a high growth rate. But the valuation gap is huge in terms of price to book value. Gruh's price to book is 8.10, which is almost three times Repco's 2.73. Gruh's long history and quality loan book is reason for a higher valuation. Gruh has all the right ingredients for the long term while Repco is an undervalued stock with the high growth prospect given its low base.
| Market cap | Price to book | Price to earnings | Dividend yield | |
| Gruh Finance | ₹4,862cr | 8.1 | 29.22 | 0.0092 |
| Repco Home Finance | ₹1,944cr | 2.73 | 18.28 | 0.0035 |
