Repco Home in the red

South India based Home loan provider Repco Home Finance is down 6%, at Rs. 775, this Monday morning on news of CBI conducting search in the premises of the company at Chennai and Coimbatore.

CBI has filed a case of corruption, cheating and conspiracy against the company’s MD and 3 other officials, in a case dating back to 2008, in relation to Repco Bank, wherein the official waived off penalty and pre-closure charges, aggregating Rs. 47 lakh, to close an NPA account on Rs. 6 crore loan.

While clarification from the company is awaited, this news should however, not cause further damage to the stock price, unless there are more skeletons in the closet. Repco Home Finance is a favoured stock in the fast-growing housing finance sector. Its FY16 revenues of Rs. 850 crore earned the company PAT of Rs. 150 crore. On EPS of Rs. 25, stock trades at PE multiple of 31 times historic earnings, in line with its historic multiples.