Khambatta Securities has given Buy recommendation for Home First Finance Company with a target price of Rs. 988 in its research report issued on May 10, 2022

Khambatta Securities’ research report on Home First Finance Company

Home First Finance Company’s (HFFC’s) 4Q FY22 and FY22 results were broadly in line with our expectations as the company reached two key milestones in 4Q FY22, crossing Rs 5,000 crore in AUM and Rs 2,000 crore in annual disbursement for the first time. Registering a healthy growth of 30% y-o-y, AUM stood at Rs 5,380 crore as of 31 March 2022. Loan disbursals increased by 42% y-o-y to Rs 641 crore in 4Q FY22 while it grew by 85% y-o-y to Rs 2,031 crore over the full financial year. NII expanded 45% y-o-y to Rs 85 crore and 41% y-o-y to Rs 288 crore in 4Q FY22 and FY22, respectively. Net revenues increased 24% y-o-y to Rs 102 crore and 40% y-o-y to Rs 378 crore in 4Q FY22 and FY22, respectively. Adjusted PAT increased 54% y-o-y to Rs 48 crore and 74% y-o-y to Rs 174 crore in 4Q FY22 and FY22, respectively. The adjustment in the PAT pertains to a onetime deferred tax liability. Mar-22 Gross Stage 3 ratio was 2.3%. Mar-22 GNPA ratio based on the old classification was 1.3% (vs 1.7% in Dec-21). GNPA provision coverage ratio stood at 47.1% in Mar-22 vs 46.2% in Dec-21. PCR without considering the impact of the new RBI circular was 83.6% in Mar-22 vs 69.1% in Dec-21. Total CRAR was 58.6% while Tier-1 capital was 58.0% as of 31 March 2022. Physical branches / total distribution points increased from 76 to 80 and 187 to 200, respectively on a q-o-q basis.

Outlook

We maintain a BUY rating with an unchanged price target of Rs 988, implying a FY24E P/E of 35x and P/BV of 4.3x and informing an upside of 27% from current levels.

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