Home First Finance’s customers are typically salaried (73 percent of AUM) who work in small firms or self-employed (25 percent of AUM) who run small businesses.
Sunil Shankar Matkar
February 03, 2021 / 01:46 PM IST
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Home First Finance share price rallied as much as 23.4 percent on its first day of trading, February 3, largely due to positive market conditions, better IPO subscription numbers and strong fundamentals.
The stock touched an intraday high of Rs 639.50 and low of Rs 565 after opening at Rs 612.15 on the BSE. It was trading at Rs 585.20, rising 13 percent over issue price of Rs 518, but down 4.4 percent from opening price, at 12:48 hours IST.
Investors who received shares in the allotment can book partial profits if they invested only for listing gains, but the medium term investors can hold the same to get a good price going ahead, experts feel.
“We recommend investors to book a partial profit on listing day if stock is available at 30 percent & above premium but for fresh buying we recommend to wait before taking any exposure,” Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
Jain likes the growth aspect of Home First since the company being one among its close peers to post the highest CAGR in AUM from FY15-20. “Also an asset quality front company has been able to manage its gross non-performing assets (NPA) and net NPA ratio below 1 percent in FY20,” she said.
“What attracts us more is its tech led operating model which delivers industry leading productivity ratios along with an experienced management team, marquee investors & strong board members,” she added.
Affordable housing finance company Home First was founded by Jaithirth Rao, P S Jayakumar and Manoj Viswanathan and commenced operations in 2010. True North Fund V LLP and Aether (Mauritius) entered the company as promoters. Later, other marquee investors also invested in the company including Warburg Pincus, GIC (Singapore), Bessemer, Alpha TC Holdings.
The company’s customers are typically salaried (73 percent of AUM) who work in small firms or self-employed (25 percent of AUM) who run small businesses.
With Home First’s focus on ‘core housing loans’ and low-risk ‘salaried segment’, the business appears less risky compared to other listed peers, said Nirmal Bang. HFF has grown its AUM at a CAGR of 63 percent over FY18-20, one of the fastest amongst listed financials.
With an AUM of just Rs 3,730 crore, the runway for accelerated growth has a long way to go, the brokerage said, adding further, Home First has had a strong control over asset quality with one of the highest collection efficiencies post COVID at 97.6 percent as on December 2020.
Prashanth Tapse, AVP Research at Mehta Equities feels overall IPO valuations were modest when compared with the peer but with tremendous volatility in interest rate and huge competitions, booking listing profits would be preferred strategy.
“Post listing and passing time, we will get good opportunities to accumulate Home First in a better price range,” he said.
Gaurav Garg, Head of Research at CapitalVia Global Research advised that investors who received allotment may hold the shares as they are most likely to get at attractive valuations.
Bengaluru-based Home First Finance Company India raised Rs 1,154 crore via public issue during January 21-25 including fresh issue of Rs 265 crore.
The company will utilise net proceeds from fresh issue for augmenting capital base to meet future requirements.
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