Buy Home First Finance; target of Rs 1600: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Home First Finance

HomeFirst’s 1QFY26 PAT grew 35% YoY to INR1.2b (in line). NII grew ~33% YoY to INR1.9b (in line). Other income jumped 60% YoY to INR609m (est. INR395m), aided by higher assignment income of INR247m (PY: ~INR195), higher fee income from insurance commissions, and higher investment income from the proceeds of the equity raise in Apr’25. Opex grew 33% YoY to INR868m (~8% higher than est.). PPoP rose ~41% YoY to INR1.7b (~5% beat). Credit costs stood at INR177m (est. INR90m), translating into annualized credit costs of ~36bp (PQ: ~25bp and PY: ~22bp).

Outlook

We estimate HomeFirst to clock a ~26% AUM CAGR over FY25-FY27 and NIM (as % of average AUM) of 6%/6.1% in FY26/FY27. Reiterate our BUY rating on the stock with a TP of INR1,600 (premised on 3.4x Mar’27E BVPS).

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Home First Finance_30072025_Motilal Oswal