YES Securities' research report on Home First Finance Company
Home First delivered a material 8% beat on our PPOP (excl. DA income) expectations, aided by NII beat of 3% and 4% lower-than-estimated opex. Key highlights of this consistently robust performance were a) stronger-than-expected disbursements/AUM growth, b) moderated BT Out, c) adeptly managed portfolio spread, d) benign credit cost on improvement in delinquency buckets and e) enhancement of Stage-3 coverage. RoA was sustained at an elevated level of 3.8% and RoE further rose to 13.7%. Trajectory of portfolio spread compression would be a key monitorable from hereon, but loan growth and asset quality would stay resilient in our view. Our FY23/24 earnings estimates have seen an upgrade of 3-4%, mainly on raising of loan growth assumptions. We estimate RoA delivery of avg 3.5% over FY23-25 with RoE surpassing 15% in FY25. Consistent strong execution on growth and asset quality underscores our conviction on Home First.
Outlook
We have a BUY rating on the stock with 12m PT of Rs1,030. Stock trades at 3x/20x PABV/PE on FY25 estimates.
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