Buy Home First Finance; target of Rs 1280: Motilal Oswal

BUY

Motilal Oswal's research report on Home First Finance

Home First Finance (HOMEFIRST)’s 3QFY25 PAT grew 24% YoY to INR974m (in line). NII grew 21% YoY to INR1.6b (in line). Other income grew 42% YoY to INR517m (10% above MOFSLe), fueled by higher insurance commission income. The company initiated insurance partnerships in mid of 2QFY25 and expects a quarterly run-rate of ~INR150-180m in insurance commissions, going forward. Opex grew 23% YoY to INR752m (in line). PPoP rose ~27% YoY to INR1.4b (7% beat). Credit costs stood at INR98m (vs. MOFSLe of INR55m) and translated into annualized credit cost of ~35bp (PQ: ~20bp and PY: ~30bp).

Outlook

We estimate HOMEFIRST to clock a ~28% AUM CAGR over FY24-FY27, along with an NIM (as a % of average AUM) of 5.6%/5.5% in FY26/FY27. Asset quality is expected to remain range-bound at current levels and credit costs are likely to remain benign at ~25-30bp over the near-to-medium-term. Reiterate our BUY rating on the stock with a TP of INR1,280 (premised on 3.6x Sep’26E BVPS).

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Home First Finance_30012025_Motilal Oswal