ICICI Securities has given Buy recommendation for Home First Finance Company recommended buy rating on the stock with a target price of Rs 625 in its resear with a target price of Rs. 625 in its research report issued on Apr 16, 2021
ICICI Securities research report on Home First Finance Company
Home First Finance (HomeFirst), an affordable housing financier (AHF) with AUM of Rs39bn and focus on salaried housing loans, has several value propositions that differentiate it from peers in high growth, high yielding, hugely untapped AHF segment: i) 75% customers in EWS/LIC category and 32% being new to credit; ii) technology at its core – right from sourcing to collections; iii) well-trained/educated team to appropriately assess need and right size loans; iv) paperless loan processing with quick TAT of 30% AUM growth, funding cost benefit, improved cost to income and contained credit cost, we expect earnings to compound at >40% over FY21-23E.
However due to excessive capitalisation (Tier-1 at 51%), despite 3% plus RoAs, RoEs will be modest at ~12%. Using Gordan Growth model, we arrive at target price of Rs625 – an upside of >30% from CMP. We initiate coverage on HomeFirst with a BUY rating.