Arihant Capital has given Accumulate recommendation for Home First Finance Co with a target price of Rs. 938 in its research report issued on Dec 24, 2021

Arihant Capital’s research report on Home First Finance Co

Incorporated in 2010, Home First Finance Company (HFFC) is a technology driven small ticket housing loan provider which focuses on niche customer segment and had recorded strong AUM growth of 45% CAGR over FY18-21. HFFC was founded by Jaithirth Rao, PS Jayakumar and Manoj Viswanathan. It has an AUM of INR 4,617 cr as on Q2FY22 with ~92% portfolio share in home loans. On customer segment wise, it has high share of salaried customer (~74% of AUM) with strong presence in top markets like Gujarat and Maharashtra (~57% share in AUM). HFFC has tech led business model with focused branch operations and centralized underwriting process. We expect, HFFC to achieve AUM growth of ~29% CAGR over FY21-24E, driven by high tech usage which ensures optimization of operating cost, stable asset quality, normalizing credit cost and high capital ratios.

Outlook

We initiate coverage on HFFC with Accumulate rating and target price of INR 938, based on 4.3x FY24E ABV. We believe HFFC is well positioned to capture the strong growth in the growing and underpenetrated housing market.

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