Repco Home Finance: Deep Value Opportunity in Affordable Housing

Rajeev Agrawal of DoorDarshi Advisors presented his in-depth investment thesis on Repco Home Finance (India: REPCOHOME) at Asian Investing Summit 2025.

Thesis summary:

Repco Home Finance is a small-cap housing finance company in India, focused primarily on self-employed and salaried customers in the under-penetrated affordable housing market. With a 230-branch network and a customer base concentrated in Tier 2 and Tier 3 cities, Repco offers loans through direct sales, loan camps, and distribution agents. Despite growing assets under management at only 5% CAGR over the past six years, the firm has delivered stronger PAT growth of 10.6% annually. A combination of prudent underwriting, improving asset quality, and a resilient customer base has enabled Repco to generate consistently high returns on equity — averaging 14% over the last decade and 13% through COVID-disrupted years.

The company recently traded at ₹335 per share, or approximately $244 million in market cap, representing just 4.9x trailing earnings and 0.7x book value. With a capital adequacy ratio of 32.5%, Tier 1 capital at 31.7%, and improving credit metrics, the balance sheet is robust. Non-performing assets have steadily declined, and loans disbursed post-COVID are showing stronger repayment behavior, leading to lower credit costs. Net interest margins and spreads have improved steadily, driving both income and profitability in recent quarters. While management transition remains a key overhang, incoming CEO T. Karunakaran — an internal veteran who served previously as CFO and COO — is expected to provide continuity and operational clarity, with strategic direction to emerge in coming quarters.

Repco’s performance still lags behind larger Indian housing finance peers in terms of scale and growth, but the valuation gap has widened disproportionately. Peers trade at median multiples of 2.1x book and 19x earnings despite delivering similar long-term ROEs and slightly stronger growth. If Repco’s return profile holds and loan book growth accelerates even modestly, a re-rating is plausible. Management has guided for 15–20% PAT growth, and even assuming a conservative 12% CAGR and a re-rating to 8x P/E, the stock could double over the next 2.25 years—implying a 40% annualized return.

The market’s skepticism stems from a legacy of underperformance, uncertain growth prospects, and past leadership that overpromised and underdelivered. However, recent improvements in asset quality, profitability, and capital efficiency suggest a turning point. As liquidity builds and management credibility is re-established, Repco is positioned as a classic deep value play. Investors with patience and a long-term horizon may find a compelling margin of safety at current levels.

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About the instructor:

Rajeev Agrawal is the Fund Manager and Managing Partner at DoorDarshi India Fund. DoorDarshi India Fund is a US-based fund that focuses on investing in Indian equities. Rajeev is also the founder of DoorDarshi Advisors, a General Partner to DoorDarshi India Fund. Rajeev has been investing in the US and Indian equity markets for 15+ years. Rajeev follows Value Investing principles and finds that the Indian equity market provides wonderful opportunities for his style of investing. Prior to starting DoorDarshi, Rajeev was a Technology executive focusing on the Financial Industry and has worked with IHS Markit, Goldman Sachs, Bank of America, JP Morgan and Dresdner Bank. Rajeev did his B.Tech from IIT Bombay and MBA from IIM Calcutta.