ICICI Securities research report on Home First Finance Company
Home First Finance (Home First) was listed in Feb’21. Ever since, it has managed to stand out among peers in the affordable housing finance space, consistently delivering 6–8% QoQ growth every quarter. This, in our view, is testament to its business’ resiliency and management’s ability to navigate external challenges arising from a rising rate cycle, regulatory changes (disbursements recognition on actual payment to customers rather than cheque issuance) and state-specific issues (e-khata issue in Karnataka). Successful execution of its business strategies has led to judicious capital consumption with Home First’s financial leverage (AUM/net worth) improving to ~5x by Dec’24 (~3x in FY21) alongside stable asset quality. Fresh capital of INR12.5bn would allow adequate capital to fund incremental growth, as it plans to reach INR 400bn in AUM by FY30.
Outlook
We believe, nearterm AUM growth would still remain in excess of 30%. With higher visibility of Home First sustaining its growth momentum and steady 15% RoE by FY27E, we upgrade the stock to BUY (from Add) and revise our TP to INR 1,350 (vs. INR 1,075), valuing it at 3x Sep’26E BVPS (earlier 3.5x Sep’25E).
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