Page 1 of 16

“Repco Home Finance Limited Q1 FY '21 Earnings Conference Call”

September 07, 2020

MANAGEMENT: MR. YASHPAL GUPTA – MANAGING DIRECTOR AND

CHIEF EXECUTIVE OFFICER, REPCO HOME FINANCE MR. ARUN MISHRA – CHIEF DEVELOPMENT OFFICER, REPCO HOME FINANCE

MODERATOR: MR. KUNAL SHAH – ICICI SECURITIES LIMITED

Repco Home Finance Limited September 07, 2020

Page 2 of 16

Moderator: Ladies and gentlemen, good day. And welcome to the Repco Home Finance Limited Q1 FY

'21 Earnings Conference Call, hosted by ICICI Securities Limited. As a reminder, all

participant lines will be in the listen-only mode. And there will be an opportunity for you to

ask questions after the presentation concludes. Should you need assistance during the

conference call, please signal an operator by pressing '*' then '0' on your touchtone phone.

Please note that this conference is being recorded. I now hand the conference over to Mr.

Kunal Shah from ICICI Securities Limited. Thank you and over to you, sir.

Kunal Shah: Thanks, Faizan. Good afternoon, everyone. This is Kunal Shah from ICICI Securities. Today,

we have with us Mr. Yashpal Gupta – MD and CEO, along with the entire senior management

team of Repoco Home Finance to discuss their Q1 FY '21 earnings. During this unprecedented

time we would be keen to hear your thoughts on the trends, the collection efficiency and what

would be the near to medium-term strategy. So, over to you, sir.

Yashpal Gupta: Thank you very much. And thanks for all of you to connect for this conference about quarter

one results. As we know, these are unprecedented times, our financial performance also was

impacted somewhat due to the COVID scenario. But at the same time, the numbers that you

see in P&L, they remain resilient despite of this problem. And net profit improved

sequentially, they grew by 34%, but year-on-year they remained flat, but slightly higher at 3%,

they were not lower we make additional provision. The first one and a half months of this

current quarter Q1, we did not do any business because we were in a lockdown. Things started

improving 31st June onwards, May 15th to be precise. And by the end of the quarter, our

disbursement was around 3% of the normal. So, now they have improved somewhat compared

to June, but again, at the range of 50%, 60%. We expected probably by November and

December, which is festival time also, and vaccine will also come by that time, and people will

also work on the shops, then things will improve.

The good part during this period is with respect to collection, we have always tried to collect

maximum amount. And in first quarter we gave 85% moratorium, but second was only 35%.

And we have to collect them well, the collection efficiency has been improving day-on-day,

week-on-week and month-on-month in fact in June as you see we have been In fact, in June as

you see, we have been able to reduce the NPA from 4.25% in March to 4.02% in June. Our

provision requirement as per the IndAS model that we have was only Rs. 165 crores, but we

have made Rs. 55 crores extra provision, particularly in March, and Rs. 15 crores about in

June. So one-third provision extra, so we have present additional buffer, but deliberately we

are keeping some liquidity, while it comes at a cost, but at the same day gives confidence to

lenders that we are safe.

Plus, if you see our debt-to-equity ratio, it has been lower than 6:1 whereas (Inaudible) 3:50.3

26%. If we reduce the entire net NPA also, it is about 17 and (Inaudible) 3:59.3. Then also our

Repco Home Finance Limited September 07, 2020

Page 3 of 16

company has seen (Inaudible) 4:01.6 20%. So we are very safe, our shareholders are very

safe. Despite all these things that we have done, lower debt-to-equity ratio, give higher capital

adequacy ratio, additional provision, in spite that our spread has been more than 3%, our NIM

is more than 4.3%, and we hope that for the current year we will be able to maintain. While the

spread in the environment has fairly come down, it is because income levels are affected,

because we could not do much new business, most of the disbursement in the quarter was also

over the loan sanctioned before March, so we could not get any new business, much new

business. Then that affected our previous income, and also retail income that we get. But going

forward, we are confident, our country has started again going up. We already sanctioned our

loans in June which have disbursed in July, and in July which will be disbursed in August and

September, that means the cycle is starting. Though it is running at 50% to 60% speed, but

right now we are okay with that.

If you see the provision, as I told you, our structure has been improving. One thing which I

want to share with all of you if that a lot of (Inaudible) 5:40.3 the collection was better and

our NPA was lower because of moratorium. But let me tell you despite the moratorium only

6.18% of customers are that who did not pay a single rupee to us since March to August. It is

only 8.5% by value, and about 6.7% by number. So that should give us good confidence, that

despite moratorium, despite lot of NPL because of the RBI definition, we are good in

correction. Then, if you see that we told in March you would see that our SMA2 cases had

come down to only 3%, in June also SMA1, SMA2 was, SMA1 was got high, SMA2 was got

low. So we hope that after moratorium is lifted, we are doing collection and that will continue.

And hopefully in September, December also our NPAs will be less. That is what we think.

The loan book grew by only 60% during the year, but if we see data released by RBI, it is only

for the entire banking system, it is only 5.5%. 6% is a decent number and we hope that good

forward it will be much higher. But right now, we are working more on the quality, the ALM

issues and liquidity and paying on time, that is our concern. And also, there was some stress

for reducing the operating profit cost, as our operating cost is already very low, it is not much.

And then I repeat the number, the total income, it was Rs. 341.9 crores which is 4% higher

than last year. In March NIM was 4.3%, April was 3%, PAT has grown by 3% despite making

extra provision to Rs. 64 crores. ROE 2.2%, ROE is lower at 15% but because of net was

increase.

So with this, I leave the floor open to your questions. Thank you.

Moderator: Thank you very much. We will now begin the question and answer session. The first question

is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Repco Home Finance Limited September 07, 2020

Page 4 of 16

Rahul Jain: Very heartening to know that, and if I have heard it right, only (Inaudible) 09:12.6 customers

by number of customers, and 8.5% percent by value are the customers who have not paid a

single instalment since March. Right, sir?

Yashpal Gupta: Yes, you are right.

Rahul Jain: Sure. That's very heartening to know, sir. Sir, a couple of questions. So, in terms of collection

efficiency, I missed the figure, what is the collection efficiency as we speak today?

Yashpal Gupta: See, today at beginning of September it is difficult to know because you might be aware, but if

you are not aware let me tell you. Our due date is last day of the month, so we have collected

but we will not know till the end of the month. If you are asking about August, then again by

number, because we are not a bank, so customer pays a bank, and then reconcile. Today it is

7th September, but it according to me, it is a provisional data. But based on whatever I know, it

should be about 65%, 70% number, by number.

Rahul Jain: For August month?

Yashpal Gupta: Yes, because one challenge we are facing, regular payment should be somewhere between

65% to 70%.

Rahul Jain: So sir, our collection efficiency was around 68% in June. And you just mentioned that in

August our collection efficiency must be in the range of 65% to 70%.

Yashpal Gupta: Yes, correct.

Rahul Jain: There we are not seeing much improvement?

Yashpal Gupta: No. See, of course, as cases are pending in honorable Supreme Court, so most of the customers

and they want to keep cash. So when we had given moratorium, some were hoping that they

will get interest, but some are hoping that they will get waiver off on interest. And also, the

activity levels have started picking up, so they are paying cash. So, there is not a huge

improvement, but definitely there is some improvement. And from September, because the

moratorium is not there, we hope collection efficiency will improve.

Rahul Jain: Sure. Sir, in previous quarter calls we had mentioned the NPA levels to be around 4.5% for

this current year. So, as we speak today, what is your understanding or judgement or guidance

for the NPA numbers for the current year based on the situation today?

Yashpal Gupta: Last time we said that June and September will be lower, of course, we know because of

moratorium. December will be 4.5%, again March we expect it to come by 4.2% or 4%. That

there I don’t see any change as such. Of course, we are sure about one thing that you are right

Repco Home Finance Limited September 07, 2020

Page 5 of 16

in that, that once the moratorium is lifted, housing construction behavior to see but based on

the feedback that we are getting from ground, I don't see any reason to change that estimate.

Moderator: Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please

go ahead.

Sarvesh Gupta: Congrats on a decent set of numbers. So first is, now that the moratorium is over, what kind of

response are you getting from your clientele in terms of repayment of the existing liabilities

that they have? So that's the first question, if you can give us some sense of what is happening

post moratorium in your business.

Yashpal Gupta: No, you are talking about prepayment or repayment, I could not get that?

Sarvesh Gupta: Repayment, sir.

Yashpal Gupta: Yes. As I told you in the previous answer that moratorium is over on 31st August. And what

you did was, in our case, for all the EMIs we are paying, the due date is last day of the month.

So the customer has the time to purchase or to pay. So we don’t wait till last day of the month,

we start early but generally the collection starts from 10th September 10th day of the month.

So we know early on, I mean, towards 15th or 20th how the customers actually are paying. But

based on the feedback that we received from last year while we are talking to customer, we

hope the collection should be much better. But I cannot say a number because we do till only

last day of the month. (Inaudible) 14:57.3 But I can tell you we (Inaudible) 15:00.2 in the

collection.

Sarvesh Gupta: Okay. And secondly, if I heard you correctly, you have made a total excess provision of Rs. 55

crores in March and June quarter, Rs. 40 crores plus Rs. 15 crores. And you know if I look at

your loan book which is Rs. 11,000 crores plus, and if I look at even your Stage 3 assets as of

now, which are roughly around Rs. 500 crores, in relation to both of these, this Rs. 55 crore

looks to be a very tiny provision which has been made. So, what gives you this confidence that

Rs. 55 crores would be good enough to absorb the entire hit that you are going to take from

March to June, which is like four months of COVID will be absorbed within Rs. 55 crores of

additional credit cost while the moratorium was on? It looks to be on a very lower side, sir, if

you can give us your sense of what gives you this confidence that this is enough?

Yashpal Gupta: One is that what we get confidence from is, number one, we are in the business for more than

20 years, this year is the main month, it will be 20 years of our existence. In the last 20 years

(Inaudible) 16:21.8 that if customer is not even paying 100% of interest, we don’t have

waiver, it is only Rs. 50 crores. In the last years we have been given waiver of only Rs. 50

crores as principle, number one. Number two, we are into secured lending, housing or a

mortgage loan. Or every LTV size is only LTV is somewhere low, somewhere high, but only

Repco Home Finance Limited September 07, 2020

Page 6 of 16

60%. So, in all the cases where we do publish separately and all that, we invariably recover

more than 100% of receivables. (Inaudible) 17:04.1 We negotiate even today, even today I am

saying, we were negotiating last week only these negotiations, where residual amount is Rs.

2.2 crores (Inaudible) 17:18.9 what we had done what was pretty sure. So we never negotiate

on principle, there are some cases, but they are very far in between. So that is the second thing.

The third thing is that we had appointed (Inaudible) 17:35.9 in 2018, they continue with us.

E&Y as our advisor for the ECL calculation, and they have gone into our entries and all that,

and they have derived a model based on (Inaudible) 17:53.8 they have arrived at loss given

default, we arrive at ECL. So, as per their model, of course, we have released it, no problem,

but that is Rs. 135 crores based on that we can always what gives us so confidence. But our

total provision as no 30th June is Rs. 210 crores, our book size is also Rs. 27 crores. So,

provision as a percentage of book is about 1.8%. This is all the housing finance revenue, those

who are into retail lending. When we don't have any exposure to builder financing, I mean, we

have a regular builder but not a major funding. Builder funding will get individual loans from

us, we don't have anything, all our loans are retail loans. Whereas all other housing finance

companies who provision after retail board, it is less than 1%, my is 1.8%. So, these are the

factors which give us confidence that gives us extra provision. Nobody can say what is that,

but based on this what I told you, this gives us confidence that (Inaudible) 19:13.7. Plus, last

part, as I told you, if you take our net NPA, we have (Inaudible) 19:21.2 minor provision of

Rs. 200-odd crores, it is more than all net worth entirely, even then our capital will be more

than 20%. So, think these are enough questions available for it.

Sarvesh Gupta: Understood, sir. And finally, on the growth side, sir, what is your guidance, given what you

have seen in the last five months of this pandemic, so what is the sort of sense that you are

getting on the growth side, will we be able to, are we even thinking about it or we are just

focused in to collections for this and liability management for this financial year?

Yashpal Gupta: See, as I told you, in June itself we had reached 50% of our normal business, in July itself it

was 60%, and it could not grow because of some technical issues on the website, whereby we

could not (Inaudible) 20.27.9 for some time. But we are very much there. The problems that

we are facing right now is the bank are very aggressive, (Inaudible) 20.39.9 net worth is not

very high, because the takeover is very aggressive, and they are giving 7%, 7.5% which we

cannot match. So, I would not like to give any guidance, but last time itself we expressed that

goal should be about 5% or so. But to be frank, I don’t think anybody who knows the figure.

And if you ask anybody, some say green shoot, some say white shoot. So I don’t think

anybody is aware, it depends on what will happen to Corona, when the lockdown will be lifted

fully, when it will come again. So there are so many things. So I will not like to give any

figure, but I would say that definitely if you see even in June month we have grown vis-à-vis

March. Today we are much fairly higher than June, so there will be some work. But what it is,

we are expecting (Inaudible) 21:40.9 we are expecting somewhere between 5% to 8%, that is

book.

Repco Home Finance Limited September 07, 2020

Page 7 of 16

Moderator: Thank you. The next question is from the line of Viraj Mehta from Equirus PMS. Please go

ahead.

Viraj Mehta: Sir, how many people actually took your moratorium 2?

Yashpal Gupta: See, moratorium 2 is about 35%.

Viraj Mehta: So, sir, when you say that only 6% people have not paid any instalment, then even within that

35%...

Yashpal Gupta: Parton?

Viraj Mehta: So sir, you mentioned in your opening comments that only 6.18% of people have not paid any

instalment since March. Is that right?

Yashpal Gupta: Yes.

Viraj Mehta: So, then how does these two figures match? Like, 30% people out of that 35% people ended up

paying post moratorium 2, because moratorium 2 has just ended So, can't understand those two

numbers.

Yashpal Gupta: Okay, let's me explain. One is, that number let me repeat again. Number of 6.18% and values

use 8.7%. Now, when we give moratorium, there might have been like you see, in March

where Stage 1 cases is zero to 30 days overdue. Now, there might have been account who are

part overdue, so they have taken moratorium, more is only for current installment, whereas

many of them might have taken moratorium in the past. So when we say we made some

payment, it might be moving towards current EMI, it is towards part EMIs. When I say that

6.8% of our customers have not with anything at all, they have not paid past overdue or current

installment. 35% deferment or moratorium is for the current installment, but they might have

paid for the past.

Viraj Mehta: Okay. So, September, since the moratorium is now over, so let's say September and October is

going to give you a clearer picture. But how many accounts do you think should be up to date

by the time September ends, or let's say by 15 of October?

Yashpal Gupta: I mean, it is very difficult for me to give any target for that. But we are expecting that we have

to be up to date means zero percent default. That may not happen because some customers,

specifically in our case, Stage 1 is 0 to 30 days, 2 days default, 3 days default, like that. But of

course, I would put it this way, we are expecting collection (Inaudible) 25:18.9 about 90% in

September, that should be a better way of looking at it.

Repco Home Finance Limited September 07, 2020

Page 8 of 16

Viraj Mehta: So 90% of people will end up paying whether it is past overdue or current instalment, but 90%

people will pay this month is what your expectation is?

Yashpal Gupta: Correct. Now they must pay fully, some will pay partially, some will pay fully. Like for

example, they are three EMIs overdue, they might be two EMIs.

Viraj Mehta: And sir, in terms of provisioning, in terms of credit cost, compared to Rs. 40 crores last

quarter, we have reduced our provision this quarter, what is this? Is this the run rate in terms of

provisioning that you expect and that is the credit cost we will have? Or I mean, do we see an

uptick and that is why we have reduced our quarter-on-quarter provisioning run rate?

Yashpal Gupta: See, actually provisioning should never be quarter-on-quarter, provisioning is an accumulated

figure. It is not that what (Inaudible) 26:30.4 made provision in Q4, that’s not it, that cements

the revenue, correct? (Inaudible) 26:38.8 for the entire year. Correct or not? So we don’t

expect that, we are planning maybe, and these are additional provisions, as I told you. There is

a model which calculates provision which is made by the employee, and then we may catch up

with them based on the cases, analysis is all that together. Now, this year we are targeting as of

now, as we speak today, (Inaudible) 27:11.0 but we are targeting additional provision of about

Rs. 50 crores to Rs. 60 crores, additional, over and above what the model says. So that is why I

meant Rs. 55 crores this quarter, because we are targeting Rs. 50 crores or Rs. 60 crores to

make additional provision or the year.

Viraj Mehta: Understood. And sir, last thing I wanted to know is, because banks and even some of the

housing NBFCs of the banks have become very aggressive. Has the takeover rate of your

customers increased substantially in the last six months, three months, if you can just provide a

color?

Yashpal Gupta: Yes, it has increased for last three months. Of course, because April and May were not good

for banks also in terms of the problem of the COVID-19. But yes, from May onwards it has

started increasing. Not substantially, but to tell a figure, it was earlier Rs. 70 crores Rs. 80

crores per month, it's now about Rs. 100 crores plus per month.

Viraj Mehta: So we are losing almost 10%, 11% of our book every year to take overs, is that correct?

Yashpal Gupta: Yes, correct, you are right. Last year it was 9%, this year so far, of course (Inaudible) 28:35.5

then yes, 10%, 11% per year, yes.

Viraj Mehta: Right. So, essentially if we have to grow 5%, 6%, we have to actually grow 17%, 18%?

Yashpal Gupta: Yes, you are right. But we think it is possible, because if you look at our book value of about

Rs. 27 crores, if you look at 17% or even 20%, (Inaudible) 28:59.3 And we are quite capable

Repco Home Finance Limited September 07, 2020

Page 9 of 16

of doing Rs. 2,000 crores to Rs. 2,500 crores. Though last two, three months have been bad,

beginning two, three months of the financial year were bad, but we started picking up. We do

not need 2004 run rate, but it will do well for us, it is not very high. If you see, last year also

we did Rs. 2,700 crores. Before that year we did Rs. 3,000 crores, Rs. 3,200 crores. So Rs.

2,400 crores are not going to be, it is difficult, it's challenging, but it is not impossible.

Moderator: Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go

ahead.

Ankit Gupta: Sir, we saw a significant decline in our incremental cost of borrowing for the June quarter. It

went almost as low as 6.37%. So, what was the key reason for that? Was it borrowing from

NHB at low rate of interest, the main contributor for that?

Yashpal Gupta: Yes, NHB has given 5.05%, plus various other banks have also given either sub-8% or

marginally above 8%. The incremental cost has come down, average cost has not come down

because this amount was only Rs. 200 crores and that book is about Rs. 7,000 crores. So

average cost has not come down significantly, but incremental cost has come down. Yes.

Ankit Gupta: Sure. But if we go to the bank currently who are our current lenders, will they be charging us

interest rate of, let's say, sub 7% or sub 7.5% currently?

Yashpal Gupta: See, I cannot tell you the name of the bank, but one bank has offered 7.3%, but it varies. Some

banks may not give 7.3%, some banks may give at around 7.75%, some banks give around 8%,

they will vary. Now, sub 7% are short-term loans, like for example, the CPs which are TLTRO

lending, that is available, but that is a short-term, (Inaudible) 31:34.2 so I would say, sub 8%

is more easier to pay, some loans are below 7.5% also.

Ankit Gupta: Sure, got it. And sir, we have taken a provision for raising NCDs of Rs. 4,000 crores. So, can

you tell us what were the key reasons for that? What kind of rate of interest are we targeting

for raising these NCDs? And what will be the purpose of these NCDs, will they be replacing

our current high cost of borrowing or is it that we want to grow this year and next year also, so

we are looking to borrow additional money as well?

Yashpal Gupta: No, NCD approval we took mostly as a stop gap arrangement, if required. But to be frank, we

are not targeting raising any NCD because the cost is quite high. When we are getting turnover

at below 8%, that too a 10-year, 15 year' loan, why should we have NCD for three to five

years? (Inaudible) 32:40.6 but not as a cost. So, we have taken an approval, but that is not

likely to be exercised.

Ankit Gupta: So currently your NCD cost or coupon rate on NCDs that if you approach the NCD market

will be higher than your banks, the rate at which you will be borrowing from the bank?

Repco Home Finance Limited September 07, 2020

Page 10 of 16

Yashpal Gupta: Yes correct, that's why we are not doing that.

Ankit Gupta: Okay. And CPs, if you want to borrow from CP market currently, what rate can we be

targeting?

Yashpal Gupta: As you know (Inaudible) 33:21.8 6%, 6.5%, 7%, that we borrow. CP is a short-term

phenomenon, so it can vary.

Moderator: Thank you. The next question is from the line of Aviral Jain from SG India. Please go ahead.

Aviral Jain: I want to understand, now that moratorium is over, would there be any possibility of

restructuring to some of the borrowers? All of the borrowers, as in all the EMIs would be due

and there would be people who would lag behind. So, are we allowed to restructure? And what

would be the basic mechanism under which restructuring could take place?

Yashpal Gupta: No, we are allowed to restructure up to December, that is why we could see how many

customers paid, how many are really in problem, that is a call we have to take which we will

take somewhere in October, after seeing the performance of payment of them in September.

But yes, we are allowed to do. Second, how to record then what RBI circular says is, you have

to take Board approval. And maximum extension that you can give is two years. So it could

mean many things, like current interest probably we will not do or the reducing EMI in the

near future or moratorium, but maximum you can do two years. So that may happen, I do not

that rule that out. But to how many customers, what value customers, what book size, what

will turn, that we are just to take a call on that. That we will take a call after they perform

payment record of September.

Aviral Jain: Sir, what I am hearing is, there is a two-year flexibility or two-year extension which would be

allowed under the restructuring. But can you also restructure Stage 2 assets as well as a part of

restructuring or would there be any cut off in terms of borrower classification as of a certain

date?

Yashpal Gupta: (Inaudible) 36:01.3 to the RBI circular if you see, there is a cut off like on 1st of March it

should be Stage 1, as on 1st of March. So, there RBI said you can restructure only those assets

which are Stage 1 as of 1st of March, number one. Number two is that they should be

employed, your own employees. So there are some relations which you have to see. But Stage

3, as on today they may be Stage 3, but they should be Stage 1 as on 1st of March.

Aviral Jain: Sure, thank you. So basically, it cannot fall below 4%, and if our book remains static, because

our Stage 3 assets as of today it's 4%, so the 4% NPA, unless the borrower pays by themselves

will remain Stage 3 and 90% and more, and they cannot be restructured, specifically for

Repco, right?

Repco Home Finance Limited September 07, 2020

Page 11 of 16

Yashpal Gupta: (Inaudible) 37:03.4 What I am doing is that, by restructuring they will not fall below 4%, but

you can fall below 4% by (Inaudible) 37:17.2.

Moderator: Thank you. The next question is from the line of ME Kulkarni from Candor Investing. Please

go ahead.

ME Kulkarni: Sir, my question is this. Slide number 13 on the presentation, you have a lot of loans in Stage 3

which are more than two years old, three years old, almost 965 loans are more than two years

old and around 770 loans are more than three years old, and they are NPAs. Why have we not

gone for the selling off these assets and recovering our money?

Yashpal Gupta: No. It is not that we are not doing, we are doing, but we have to look at many various factors

like where is the property located, whether he is coming for the repayment. So, those are, I

mean, those are operational issues. We will decide based on case by case approach.

ME Kulkarni: Okay. Because more than three years NPA seems to be a very long time, sir.

Yashpal Gupta: No, as I told you, maybe you are right, but when you do business there are many factors, they

might face difficulty in getting the permission of the court of District Collector, so many issues

are there. So we try to do that. But that is left with the company to decide.

Moderator: Thank you. The next question is from the line of Aakash Dattani from HDFC Securities.

Please go ahead.

Akash Dattani: Sir, my first question is on your NPA guidance. So, if I heard you correctly, you mentioned

that by March 31 you expect NPAs to be around, that is your gross Stage 3 at around 4%,

similar to current levels?

Yashpal Gupta: Yes, correct.

Akash Dattani: So, at the same time if I look at over the last two quarters, you have provided about Rs. 55

crores over and above what is required as per your ECL module. And in 1Q, your Stage 2

coverage has increased substantially. So, my question is that, since the company is so

conservative on loan-to-value ratio and you do not expect an increase in NPAs, why make

these additional provisions?

Yashpal Gupta: Okay. Akash, some time back, today only 15, 20 minutes back one question was, it is not

enough. Your question is it is more than enough. So what I am saying is that, there's no right

number here. Some people will think Rs. 55 crores are not enough, it is just a sort of plain

powder igloo (Inaudible) 41:09.0 some are saying Rs. 55 crores are large enough, why you

are providing. So what we do is that, there are so many investors, like what is our overall

Repco Home Finance Limited September 07, 2020

Page 12 of 16

profit, what is cushion level, what is capital base, what is likely scenario, lot of factors. So I

would say, yes, Rs. 55 crores are a subjective figure, it could have been Rs. 50 crores, it could

have been Rs. 60 crores, it could have been Rs. 40 crores, it could have been Rs. 80 crores.

This is never possible to classify everybody. We thought based on all these parameters that I

told you, Rs. 55 crores are right number. Like we told you, in current year we are looking at

around Rs. 50 crores to Rs. 60 crores, of which Rs. 50 crores we have purchased. Now,

probably it will increase, decrease, we do not know. But these are the issues on which

management has taken subjective decision. So I will say, we felt this is right number.

Akash Dattani: Right. Sir, and in your investor presentation, this time you have on slide number five you have

mentioned that there is about Rs. 5,700 million which are ERE housing loans within LAP.

Could you please elaborate on that?

Yashpal Gupta: See, actually what we did was, there are obviously confusion, we had two loans, two cash flow

loans, one is the house loan and second is LAP loan. Now we always used to tell LAP around

18.7% or so, somewhere some guys give 19%, some guys give for twice. But for me actually

they are not LAP loans alone, so they are a combination of (Inaudible) 42:56.7. For example,

that include the land loan of course, then plot loan and then commercial real estate. Now, as

per NHB definition, of course they have gone to RBI, if somebody has a more than three years

or more, in South India there we finance lot of self plus second houses. So they may be

(Inaudible) 43:26.3 where entire family maybe staying, father, mother, brother, sister, son,

son in law, daughter in law's, etc. Now, they might present picture then they become CRE due

to that we charge higher rate for them, we will make (Inaudible) 43:43.8 asset is also 100%

but normal loan is lower. So what we want to say is, LAP is not only LAP, it is LAP plus the

house loan plus CL.

Akash Dattani: Right. So this portion that you have mentioned in your presentation, what would be the

average ticket size of these loans?

Yashpal Gupta: They are Rs. 20 lakhs, Rs. 25 lakhs. The average is very low.

Akash Dattani: Right. Okay. And sir, my last question is, you mentioned that your collection efficiency in

August was about 65% to 70%, and you mentioned that about 8.5% of your customers have

not made a single instalment. So the difference between these, the balance would be with the

customers who are paying one or two installments?

Yashpal Gupta: Yes. Let me correct you, it is 8.7%.

Moderator: Thank you. The next question is from the line of Sanket Chheda from B&K Securities. Please

go ahead.

Repco Home Finance Limited September 07, 2020

Page 13 of 16

Sanket Chheda: Sir, my question was that, on NPA guidance that you are saying that the NPA will rise in Q3

and in Q4 it will be back to 4% level. I just wanted to ask that, are we building any sort of

restructuring in this as in February? So, if yes, then what would be border restructuring number

that we take into account, maybe 4%, 5% of the book?

Yashpal Gupta: See, as far as the NPA guidance is concerned, are we building in this again, the answer is yes.

Now, how much will be approved? As you know there are two things, one is that, customer is

not in a position to pay, but materially RBI requires that he is Stage 1 as on 1st March. So we

have to see that. And RBI's requirement is, he should not have been have defaulted at all in the

past. So, all the things you have to take into account (Inaudible) 46:15.9 approval after his

payment record. Second, as you know, RBI says for this you make 10% provision. We cannot

afford this provision, so how much is RBI expecting, we do not know (Inaudible) 46:35.2

better position. But yes, the NPA (Inaudible) 46:42.8

Sanket Chheda: So the guidance that we are giving is also subject to change, maybe a quarter later?

Yashpal Gupta: See, (Inaudible) 46:58.7 is very low. We expect NPA to be about 4.5% in December, and in

the fourth quarter generally things are better. So that's why we expect to do 4.5%. (Inaudible)

47:16.3 we are also internally working on that, our teams (Inaudible) 47:23.0 made the

strategy based on that, and we are guiding our team on that basis to achieve certain parameters.

So, these are not mere guidance, they are based on our well thought out strategy and execution.

Now, of course, this does not factor in the worsening of the COVID situation, some people are

saying India is (Inaudible) 47:49.7 we do not know (Inaudible) 47:53.5 I agree. But

otherwise, probably these will be right number.

Moderator: Thank you. The next question is from the line of Bunty Chavla from IDBI. Please go ahead.

Bunty Chavla: Sorry, I joined late, if I am repetitive. Sir, if I see the net addition in the loan book on a

sequential basis, there has been approximately Rs. 39 million as against sanction of around Rs.

1,600 million. So, there seems to be some interest accrual part which has been added into the

loan book. So, if you can share that number, total how much interest accrued, added in the loan

book in Q1 FY '21?

Yashpal Gupta: See, actually, I think the number is not (Inaudible) 48:50.7 what we mentioned is (Inaudible)

48:55.8 979. So, the addition is Rs. 150 crores, Rs. 160 crores. So I think (Inaudible) 49:08.0

Bunty Chavla: Sir, as you have given in the loan book AUM number of 119,795 million of the loan books,

and if I deduct the Q4 FY '21 number, which is 115,877, so it comes to around 3915 billion. So

that I was referring to. The net addition has been 3918 billion versus disbursement you have

done 1816 million. So that difference I was trying to understand, what new addition has been

done? Is it the interest accrual part, sir?

Repco Home Finance Limited September 07, 2020

Page 14 of 16

Yashpal Gupta: No, it is both parts. See, I'll tell you. The book size, there is an increase because of COVID

data, plus disbursement. (Inaudible) 49:58.5 disbursement and minus (Inaudible)

5(Inaudible) 04.2 tell you offline.

Bunty Chavla: Okay, no problem sir. And lastly sir, one, just reconfirmation of the number. You said, as of

August 2020, the moratorium number is 35% of the book, and 9% by value is the number

which has not given a single EMI, my I right, sir, just to confirmation?

Yashpal Gupta: Not a single EMI from March.

Moderator: Thank you. The next question is from the line of Manish Agarwal from PhillipCapital. Please

go ahead.

Manish Agarwal: Sir, my question is regarding your growth outlook for next two to three years. How do you see

that, can we go back to 20% kind of loan growth? That's one. And how do you intend to

overcome the challenges, like takeover challenge by the banks? You have 6% G&PA in non-

salaried segment, so how do you plan to or intend to overcome these challenges to go back to

20% kind of growth? Thank you.

Yashpal Gupta: Okay. Well, of course, we are talking about long-term strategy. There are various options we

keep on discussing. Like for example, we do not (Inaudible) 51:32.8 individual, so maybe

change of business model on a corporate basis. That is one. Second is, we do not go for very

local capacity customer where you can charge 80%, 90% and ticket size is quite large. Those

who are, say, pani-puri sellers or vegetable vendors, we can go to that segment also. Other than

that, we can tie-up with a bank. So, of course, this will keep on happening, but based on your

attempt how we can expand our footprint to the other parts of India where we are not present,

like northern India, central India where our presence is very small. So, when we look at, 20%

growth may be different, it was okay as a base of Rs. 3,000 crores to Rs. 4,000 crores, but our

base is already Rs. 12,000 crores. We can purchase (Inaudible) 52:32.5 in the year 2018 we

did purchase a small securitization pool of Rs. 39 crores to Rs. 35 crores from (Inaudible)

52:32.5 we can purchase on both. So, it is the various factors that go into play. But as of now

we are not thinking of any major long-term issue, we are doing a complete revamping of our

IT system. Other things we are right now we are moving on this year to overcome strongly out

of this pandemic, and then plan for long term. But long term keeps on discussing. Yes.

Manish Agarwal: So, if I heard you correct, you mean to say, going back to this kind of growth of 20% plus

would be difficult for you, given what the base is right now?

Yashpal Gupta: (Inaudible) 53:36.1 if in economy remains like this. If economic grows, we will also grow.

(Inaudible) 53:42.9 we did 20%, post that economy GDP was growing at 7%, 8%. So if GDP

comes up to this level, again we will increase.

Repco Home Finance Limited September 07, 2020

Page 15 of 16

Manish Agarwal: And how do you see the scenario in Tamil Nadu particularly, which is your home market?

There also for last many, many quarters we have been just doing around single-digit growth.

Do you see things changing maybe in next one-year timeframe there? Or do you see same

single digit growth there?

Yashpal Gupta: See, for the next one year, two years, we don't see anyone growth to be higher, except where

base is small. In Tamil Nadu if you see, our base is very large, so that is another factor. Plus,

that is an old book. So for some (Inaudible) 54:35.0 there are normal payments also. So, for

next one or two years, in Tamil Nadu I see single-digit growth only. But after that, maybe

economy bounced back, everything becomes normal, GDP growth is 8% to 10%, then we also

see growth of 20%, 30%. But as of now we are not giving that, yes.

Moderator: Thank you. The next question is from the line of Hari Pathak, individual investor. Please go

ahead.

Hari Pathak: Sir, in your key markets of Tamil Nadu, Karnataka and Maharashtra, how are housing prices

holding? Are they trending downwards or flat or can you share some perspective?

Yashpal Gupta: See, they are of course going down, as compared to March they have gone down. But what we

find is that we (Inaudible) 55:48.3 gone down significantly, maybe 10% down. Like for

example, you could reach a flat for Rs. 50 lakhs, maybe it will be now saying Rs. 45 lakhs.

That was happening long before, it is not because of this pandemic alone, there were huge

inventory position. So, I would say, prices have gone down but not significantly.

Hari Pathak: And you think this will have any impact on us, how do you see it playing out for you?

Yashpal Gupta: See, one is, obviously, the equity value goes up then recovery becomes an issue. But as I told

you that our average LTV is 60% and prices have gone down only by 10%. So even then we

have LTV of 70%, still we have enough cushion. So I don't think any impact will be there, I

think that is overstated impact, that will not be some extra thing, but I don't see major impact

because of prices going down. (Inaudible) 56:58.4 is a bigger worry for us then the value of

security going down.

Moderator: Thank you. As there are no further questions, I would now like to hand the conference over to

Mr. Kunal Shah for closing comments.

Kunal Shah: Thank you, Mr. Gupta, and the entire Senior Management team of Repco for addressing all the

queries and sharing the perspective. And thanks all the participants for taking time out and

participating on the call. Thank you.

Repco Home Finance Limited September 07, 2020

Page 16 of 16

Moderator: Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you

for joining us. And you may now disconnect your lines.