Home First Finance Q4 Results Review - Growth Outlook Strong; Spreads Under Pressure In H1: Nirmal Bang

Nirmal Bang Report

Home First Finance Company Ltd. has demonstrated robust assets under management growth (34.7% YoY) in FY24; we expect the trajectory to continue, aided by deeper geographic expansion.

Despite high competitive intensity and balance transfer-out pressures, we expect the company to maintain spreads in the range of ~5% - 5.25% in FY25E (5.5% for FY24), supported by expansion into new geographies/ loan against property.

Expect opex spend to increase, factoring in planned branch expansion; credit costs to be contained in FY25E.

Stake sale by PE investors remains a key overhang; we remain structurally positive on Home First Finance’s growth prospects and execution capability

While near term return on equity is suppressed due to high capital adequacy (39% Tier 1 ratio), we expect it to expand to 18% by FY26E with an return on asset of 3.5%. Maintain Buy with a target price of Rs 1,150 keeping the multiple unchanged at 3.6 times FY26E price/adjusted book value.

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