Repco Home Finance ends below issue price on Day 1

MUMBAI: Repco Home Finance closed below issue price of Rs 172 on debut as investors chose to stay away from the company amid macro economic concerns. The company, a wholly owned subsidiary of Repco Bank, focuses on providing home loans in tier-II and tier-III cities.

The stock ended at Rs 164.70, down 4.24 per cent or Rs 7.30 on the NSE. It touched a high of Rs 175.90 and a low of Rs 158 in trade today.

The management in an interview to ET Now said it plans to focus on expanding in South Indian markets as of now. It is treading cautiously in rest of India. The finance company doesn’t face asset quality concerns with respect to non-salaried customers who account for 50 per cent of its loan book.

“At the IPO price band of Rs 165-172, the stock is available at multiple of 1.8x-1.9x FY13E ABV (post dilution). Considering high RoA of 2.4 per cent, strong loan growth trajectory owing to lower base and strong margins of ~4 per cent, said ICICI Securities in its IPO report.

“The bank is consciously targeting markets that are relatively underpenetrated like the Tier II and Tier III cities and at the peripheral areas of Tier I cities. In that it has its focus on the non salaried borrower base, the report added.

The company has allocated 23.31 lakh equity shares to anchor investors at Rs 172 per share aggregating to Rs 40.1 crore. Some of the anchor investors include Goldman Sachs India Fund, Birla Sun Life Trustee Company, Reliance Capital Trustee Company, Nomura India Investment Fund, Citigroup Global Markets Mauritius, Sundaram Mutual Fund, ICICI Prudential Banking and Franklin Templeton Mutual Fund.