Home First Finance Company India Ltd. IPO (Home First Finance IPO) Detail
Home First Finance IPO Details
IPO subscribed 2.2 times, retail portion booked 3.4 times on Day 2.
| IPO Opening Date | Jan 21, 2021 |
| IPO Closing Date | Jan 25, 2021 |
| Issue Type | Book Built Issue IPO |
| Face Value | ₹2 per equity share |
| IPO Price | ₹517 to ₹518 per equity share |
| Market Lot | 28 Shares |
| Min Order Quantity | 28 Shares |
| Listing At | BSE, NSE |
| Issue Size | [.] Eq Shares of ₹2 (aggregating up to ₹1,153.72 Cr) |
| Fresh Issue | [.] Eq Shares of ₹2 (aggregating up to ₹265.00 Cr) |
| Offer for Sale | [.] Eq Shares of ₹2 (aggregating up to ₹888.72 Cr) |
Home First Finance IPO Lot Size
The Home First Finance IPO market lot size is 28 shares. A retail-individual investor can apply for up to 13 lots (364 shares or ₹188,552).
Home First Finance IPO Market Lot:
| Minimum Lot Size: | Minimum 28 Shares |
| Minimum Amount: | ₹14504 |
| Maximum Lot Size: | Maximum 364 Shares |
| Maximum Amount: | ₹188552 |
Home First Finance IPO Promoter Holding
| Pre Issue Share Holding | 52.85% |
| Post Issue Share Holding | 33.70% |
Home First Finance Company is an affordable housing finance company. The company primarily caters to the low and middle income groups by offering them housing loans to construct and buy homes. It further offers other loans like loans against property, developer finance loans, and loans to buy commercial property.
The company has a diverse lead generation source channel including connectors, contractors, architects, affordable housing developers, and others. As on Sep 30, 2019, the business has a strong branch network of 65 branches across 60 districts in 11 different states and a union territory in India with key presence in market such as Maharashtra, Karnataka, Tamil Nadu, and Gujarat.
Business Models
- Home loans for salaried professionals.
- Home loans for the self-employed.
- Home construction loans.
- Home extension and renovation loan.
- Loan against property. Loan for NRIs.
- Home loans for senior citizens.
- Home loan balance transfer.
- Home loan top up.
- Shop loans.
- Loans for purchase of commercial property.
Company Strengths
- Technology-driven affordable housing company.
- Strong penetration in the largest housing finance market.
- Diversified lead source channel.
- Experienced and qualified managerial team.
Company Promoters:
True North Fund V LLP and Aether (Mauritius) Limited are the company promoters.
Home First Finance Company Financial:
Home First has improved its credit ratings from CARE A- as of March 2017 to CARE A+ as of September 2020 and also currently has an A+ (stable) rating from ICRA. As of September 2020, its total Borrowings (including debt securities) were Rs 2,636.58 crore.
Home First has posted strong growth in net interest income (NII) of 58.6 percent CAGR between FY18-20 while net profits have grown at a CAGR of 122.6 percent during the same period.
| ₹ in Crore | |||||
| Revenue | Expense | PAT | |||
| 2017 | – | – | – | ||
| 2018 | 134 | 110 | 16.0 | ||
| 2019 | 271 | 206 | 45.1 | ||
| 2020 | 420 | 312 | 79.1 | ||
| 2021 – H1 | 243 | 173 | 52.8 |
Recommendations by Broker and Financial institutions
The company had a capital adequacy ratio (CAR) of 51.7 percent at the end of September 2020 which provides comfort, said Angel Broking which expects the company to post strong growth driven by strong demand for affordable housing.
Angel Broking recommended a ‘subscribe’ rating on the issue,
At higher price band, the stock valued at 4.1 times Q2FY21 price to book value, said LKP Securities. This brokerage said that the IPO is worth subscribing, citing strong return ratios with RoA of 11 per cent and RoE of 3 per cent.
“Aided by its high growth momentum on a smaller base, superior underwriting standards, and efficient collections management (GNPAs at <1% and modest credit costs), Home First Financ delivered healthy RoA of 2.7% in FY20. RoE of 11% looks modest owing to lower leverage at 4x in FY20. The issue is priced at post-money P/BV of 3.4x compared to its nearest competitor Aavas Financiers which trades at 6.8x on September BV,” Yes Securities said in a note.
“At higher price band ( ₹518), the stock valued at 4.1 (x) 2QFY21 P/ BVPS. Factoring the superlative return ratios, ROA/ROE of 11%/3%, we believe that Home First Finance Company is worth subscribing. Thus we recommend subscribe,” LKP Securities said in a note.
Risks
Availability of cost effective funding source. Historically it has sought funding from public and private banks, the National Housing Bank and through assignment transactions.
Volatility in borrowing and lending rates: Finance costs represented 64.4% of its total expenses in the six months through Sept. 30.
Credit quality and provisioning: The net non-performing assets for the company stood
Grey market Premium:
The grey market premium suggests an upside of ₹1-2 for the price band set at ₹25-26 per share.
