Tag: Home First Finance

Home First Finance to open 20-25 branches a year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Home First Finance Company aims to open around 20-25 branches a year, said MD and CEO Manoj Viswanathan in an interview with CNBC-TV18.

The company has 321 touchpoints currently and it aims to take it up to 400 in the times to come, he added.

This affordable housing financier reported a 31% increase in net profit over last year at ₹84 crore for January-March period.

He believes the demand on the ground has been fairly strong. “Post-COVID we saw a surge in interest in the construction of houses, purchase of houses.”

For April-March 2024-25, Viswanathan expects loan growth of more than 30%.

Also Read | Home First Finance rises 4% on insurance regulator’s composite license approval

After general elections 2024, he also expects some schemes to boost affordable housing. “That is likely to give further thrust to the momentum, which is there in the industry already,” he said.

The average ticket size is at ₹12-13 lakh, he said.

He expects the cost-to-income ratio to be around 33-35%. In the fourth quarter, the cost-to-income ratio was around 34%.

The current market capitalisation of the company is ₹7,748 crore.

For more, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Home First Finance Q4 net profit jumps 31% to ₹84 crore, NII up 22% to ₹137 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Affordable housing financier Home First Finance Company India Ltd on Wednesday (May 8) reported a 30.5% year-on-year (YoY) jump in net profit at ₹83.5 crore for the fourth quarter that ended March 31, 2024.

In the corresponding quarter, Home First Finance Company posted a net profit of ₹64 crore, the company said in a regulatory filing. The company’s revenue from operations increased 37.9% to ₹3,127.6 crore as against ₹2,268.4 crore in the corresponding period of the preceding fiscal.

Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, rose 22.4%, coming at ₹136.8 crore against ₹111.8 crore in the corresponding quarter of FY23.

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For FY24, Home First Finance witnessed a surge in disbursements, recording a total of ₹3,963 crore for the fiscal year 2024, marking a year-on-year growth of 31.5%. The Asset under Management (AUM) for Home First Finance stood at ₹9,698 crore, reflecting a year-on-year growth of 34.7%.

Notably, housing loans continue to be the primary focus area for Home First Finance, contributing 86% to the total AUM. The Expected Credit Loss (ECL) provision as of March 2024 stood at ₹71 crore, resulting in a total provision to loans outstanding ratio of 0.9%.

Furthermore, the Gross Non-Performing Assets (GNPA) to Total Provision Coverage Ratio (PCR) improved to 50.9% in March 2024. Home First Finance’s total borrowings, including debt securities, amounted to ₹7,302 crore as of March 2024.

Also Read: Tata Power Q4 Results | Net profit jumps 15% to ₹895 crore, declares dividend of ₹2

Despite an increase in the cost of borrowings to 8.2%, representing an 80 basis points rise year-on-year, the company maintains a healthy liquidity position, with ₹2,055 crore in liquidity reserves as of March 2024.

Furthermore, Home First Finance demonstrates robust capital adequacy, with a Total Capital to Risk-weighted Assets Ratio (CRAR) of 39.5% and Tier I capital at 39.1% as of March 2024. The company’s net worth stood at ₹2,121 crore.

The results came after the close of the market hours. Shares of Home First Finance Company India ended at ₹895.05, up by ₹16.30, or 1.85% on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Home First Finance rises 4% on insurance regulator’s composite license approval

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Home First Finance surged nearly 4% on Thursday (February 22) in the wake of receiving a composite license from the Insurance Regulatory & Development Authority of India (IRDAI). This development empowers Home First Finance to diversify its offerings by engaging in the sale of life, general, and health insurance products.

As of the latest available information, Home First Finance’s market capitalisation stands at around ₹8,221 crore.

On BSE, the stock was trading 2.49% higher at ₹933 apiece at the time of writing this report.

The composite license, issued through a certificate dated February 21, 2024, falls under the Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015.

Home First Finance’s newly acquired license is valid from February 21, 2024, to February 20, 2027, according to details provided in a regulatory filing.

On Monday, PB Fintech’s wholly-owned subsidiary, Policybazaar Insurance Brokers, also received in-principle approval from IRDAI to transition from a direct insurance broker to a composite insurance broker.

The composite license allows companies to operate as intermediaries in both life and general insurance, providing customers with a one-stop shop for their insurance needs.

This expansion into multiple insurance categories enhances the service offerings of financial entities.

Recently, a parliamentary panel proposed a shift in the insurance sector, suggesting that insurance companies be granted a composite license to offer a wide spectrum of products.

This recommendation comes with the added flexibility for prospective insurers to apply for sub-classes of business, such as accident, health, and motor insurance.

The existing regulatory framework prohibits insurers from selling both general and life insurance policies through a single entity.

Therefore, the proposed shift towards composite licensing necessitates amendments to the Insurance Act, 1938, and the Insurance Regulatory and Development Authority Act, 1999.

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Home First Finance needs to pad up capital as a big chunk of loans turn more ‘risky’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Manoj Viswanathan, MD and CEO at Home First Finance, on Friday (November 24) expressed concerns about the potential impact on the company’s capital adequacy due to regulatory uncertainties surrounding the risk weight assigned to the LAP (loan against property) portfolio.

Viswanathan stated, “We are still waiting for clarification on whether housing finance companies (HFCs) as a whole are excluded or whether only the housing portfolio is excluded. If at all we have to take a higher risk weightage on the non-housing portfolio, that is 13% of our portfolio. That should probably impact our capital adequacy by probably 1-2%, because our capital adequacy currently stands at 45%. So, for a long time to come, it will not really make a major change for us.”

The uncertainty arises from the ambiguity regarding the risk weight assigned to the LAP portfolio and whether housing finance companies will be exempted from the potential adjustments. Home First Finance, like many other financial institutions, awaits clarification on the regulatory stance to better understand the implications for their operations.

Also Read | Home First Finance slips 4% after 9.78% equity change hands via block deal

Viswanathan elaborated on the potential impact, stating that a higher risk weightage on the non-housing portfolio, which constitutes 13% of Home First Finance’s overall portfolio, could lead to a 1-2% reduction in capital adequacy. However, he reassured stakeholders that the current capital adequacy ratio of 45% provides a buffer, minimising the immediate impact on the company’s financial standing.

He emphasised that among HFCs, their LAP holds the smallest share, indicating that it is not a primary focus or a core product for the company. He clarified that Home First Finance is not actively targeting or pursuing LAP, and the anticipated ratio is expected to maintain its current levels, ranging between 13% and 15%.

The CEO emphasised that, despite the anticipated impact, the change would not result in a significant alteration to Home First Finance’s financial landscape.

With a presence in 13 states across the country, Home First Finance is strategically positioned where 80% of the demand for affordable housing resides.

“At least for the next three-four years, we will continue to focus on these 13 states. Our aim is to deepen the distribution in these 13 states,” the CEO said.

Looking ahead, the company aims for substantial growth, targeting a doubling of assets under management (AUM) from the current ₹8,500 crore to an ₹20,000 crore by the fiscal year 2027.

For more, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Home First Finance slips 4% after 9.78% equity change hands via block deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Home First Finance Company India Limited are currently trading with losses after the housing finance company had a large block deal take place on Thursday, November 23.

Around 9.78% of the company or nearly 86.2 lakh shares exchanged hands in the block deal. The transaction, valued at nearly ₹754.4 crore, happened at ₹872 per share. The buyer and seller in the deal are not officially known.

Private equity investors including Warburg Pincus, True North, and Aether had reportedly put their stakes on the block. The floor price for the block deal was set at 5% discount to ₹869 per share.

The stock tumbled over 4% to hit a day’s low of ₹888 on the NSE. At 10:03 am, the scrip was trading 2.73% lower at ₹889.50 apiece. In the past one week, the stock of this housing finance company declined 7% as against a 0.8% rise in the benchmark Sensex.

Home First Finance shares have gained nearly 30% in the last six months. On a year-to-date basis, the stock has risen 19% while it’s up 26% in the last one year.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Home First Finance reports net profit of Rs 64 crore in Q4, declares final dividend

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Affordable housing-focused shadow bank Home First Finance on Tuesday reported a 6.7 percent year-on-year jump in net profit at Rs 64 crore for the fourth quarter that ended March 31, 2023. In the corresponding quarter last year, the company posted a net profit of Rs 60 crore.

The net interest income (NII) of the bank jumped 31.4 percent, coming at Rs 111.8 crore against Rs 85.1 crore in the corresponding quarter of FY19, the lender said in an exchange filing.

The company’s disbursals increased from Rs 2,031 crore in FY22 to Rs 3,013 crore in FY23, leading to AUM growth of 33.8 percent from Rs 5,380 crore to Rs 7,198 crore, it said.

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During FY23, profit after tax increased by 31 percent from Rs 174 crore to Rs 228 crore. Return on equity (ROE) improved sharply by 170 bps to 13.5 percent in FY23 over FY22’s 11.8 percent.

The fourth quarter witnessed an ROE of 14.4 percent against 12.5 percent for the corresponding quarter last year. Improvement in ROE was backed by strong NIMs (6.4 percent vs 5.4 percent year-on-year), optimal use of cash, and judicious operating costs.

Manoj Viswanathan, managing director and chief executive officer, said our physical branch office distribution crossed 100 branches (111 branches as of March 31, 2023) and disbursed more than Rs 3,000 crore in this financial year which is the highest ever since the commencement of business.

Also Read: UCO Bank Q4 results: Net profit zooms 86% to Rs 581 crore as bad loans decline

“This year also saw the entry of International Finance Corporation (a member of World Bank Group) as a lending partner to the company with the issue of NCDs aggregating to Rs 280 crore. We also received a “low risk” ESG rating from Morningstar’s Sustainalytics, a testament to our best-in-class business practices,” Viswanathan said.

The Board of Directors have recommended a dividend on equity shares at the rate of Rs 2.60 per share (130 percent) of the face value of Rs 2 each, for the financial year ending March 31, 2023, the company said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Significant opportunity for housing finance companies outside the top four cities where disbursal ticket size less than Rs 25 lakh: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Morgan Stanley in its initiating coverage report on housing finance companies says there is significant opportunity outside the top four cities especially where the disbursal ticket size is less than Rs 25 lakh. The report further states that the sector is niche, under-penetrated, has a secular growth outlook and is ESG positive.

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The brokerage foresees stronger growth outlook, where valuations are now at  attractive levels and peak rates are in sight. Morgan Stanley’s top picks are  Aptus Value Housing Finance India and Home First Finance Company India given its smaller balance sheet and hence a higher loan growth potential with attractive valuations. Morgan Stanley gives an overweight rating to these two stocks and an equal weight rating to Aavas Financiers and Can Fin Homes.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fidelity, Nomura Funds buy big in Home First Finance big block deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fidelity Funds and Nomura Indian Stock Mother Fund were the major buyers in the major block deal in Home First Finance which saw Bessemer India Capital Holdings sell 68 lakh shares.

Shares of technology-driven affordable housing finance firm Home First Finance Company India Ltd. fell as much as 9 percent on Thursday after over 73 lakh shares exchanged hands in a large trade.

The number of shares changed hands amount to 8.4 percent of the company’s total equity.

While Fidelity and Nomura bought 4.9 lakh and 7 lakh shares respectively at Rs 685 a piece, while Bessemer which held 7.75 percent equity in the company at the end of December 2022, sold 68 lakh shares at Rs 686.

Home First Finance Company India Ltd is a technology-driven affordable housing finance major with pan-India presence. It focuses on providing home loans to first-time home buyers mainly salaried individuals having income of less than Rs 50,000 per month.

Shares of the company are down nearly 27 percent from their 52-week high level hit on August 16, 2022.

The financing company witnessed its highest-ever quarterly disbursement of Rs 780 crore in the December quarter. Its assets under management grew by 35 percent year-on-year to reach Rs 6,751 crore during the quarter.

Brokerage firm Jefferies, in a note last week, stated that affordable housing financiers are expected to witness strong profit growth supported by strong loan growth over the next three years.

Loan growth at affordable housing finance companies should grow at 19-20 percent CAGR over fiscal 2023-26, the brokerage said.

Shares of Home First Finance are trading 7 percent lower at Rs 686.05.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mumbai-based housing financier’s stock jumps — analysts see 25% further upside on affordable segment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Home First” isinid=”INE481N01025″ bseid=”543259″ nseid=”HOMEFIRST” sector=”Finance – Housing” exchange=”nse”]

Home First Finance shares continued to rise for the third consecutive day after Jefferies initiated coverage on the stock with a ‘buy’ call and a target price implying more than 25 percent upside potential. The brokerage is banking on the Mumbai-based housing finance company’s leading position in the affordable segment, growth prospects owing to strong demand and network, and improving asset quality.

The Home First Finance stock gained by as much as Rs 21.6 or three percent to Rs 740 apiece on BSE, taking its surge to 12 percent in three back-to-back sessions with large volumes.

Jefferies expects housing credit demand to remain strong, with loans at housing financiers operating in the affordable segment to grow at a CAGR of 17-18 percent over the four years ending March 2025.

It expects Home First’s earnings per share (EPS) to grow 24 percent over the four years ending March 2025, driven by strong profit growth and improving return on equity (RoE), which it believes should support a rerating.

The brokerage is positive on higher productivity at Home First. The company disburses 2-3 times loans by value per branch compared with its peers “as it targets urban peripheries with more concentrated demand, originates 72 percent of loans through third-party connectors and leverages tech (tech cost at 26 bps of loans higher vs peers) and centralised underwriting to reduce cycle time,” Jefferies said.

The brokerage expects the company’s earnings per share (EPS) to expand at 24 percent over the four years ending March 2025, driven by strong profit growth and improving return on equity (RoE) that it believes should support a rerating.

Home First reported a 21 percent increase in net profit to Rs 54.3 crore for the July-September period. According to a regulatory filing, its net interest income — or the difference between interest earned and the cost of servicing liabilities — rose 28.5 percent to Rs Rs 118.24 crore.

Net interest margin — a key measure of profitability for financiers —  improved by 130 bps to 6.5 percent. Its loan disbursals increased 36.3 percent to Rs 702.2 crore. 

Jefferies expects its net interest income to grow at a CAGR of 28 percent over the four years despite some margin pressure.

Its asset quality — measured as a percentage of bad loans in total loans — improved. Gross non-performing assets improved by 20 bps sequentially to 1.9 percent in the July-September period.

Home First Finance shares have lost almost 14 percent of their value in the past month, a period in which the Nifty benchmark has risen 6.4 percent.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Home First Finance shares rise after company denies reports of Warburg’s exit plans

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Home First” isinid=”INE481N01025″ bseid=”543259″ nseid=”HOMEFIRST” sector=”Finance – Housing” exchange=”nse”]

Home First Finance shares held on to the green on Thursday after the company’s management denied reports that certain shareholders are planning to exit the company. The housing finance company’s CEO and MD, Manoj Viswanathan, told CNBC-TV18: “I don’t think any of the investors are looking to exit the company completely. We are not privy or party to any such discussions.”

He also said he is not aware if Warburg wants to sell a part of its stake in the company. Earlier, the Hindu Business Line had reported that Warburg was looking to sell 28.73 percent in the company.

“We have four large private equity investors from whom we have raised capital over the last several years. We have Bessemer Venture Partners, which holds about eight percent of the company, True North and GIC, whose combined holding is 33 percent, and we have Warburg Pincus, which holds about 29 percent,” he said.

Out of these four, True North and Aether are the company’s promoters, and 20 percent of the promoter holding is locked in till February 2024, he said.

“So 20 percent out of 33 percent is locked in…. Only the balance 13 percent is available at this point of time. However for any partial stake sale the company would not be privy to these kind of transactions as they would happen in the market,” he said.

The stock rose by as much as Rs 42.1 or 4.9 percent to Rs 907 apiece on NSE on Thursday.

Home First Finance, Viswanathan said, is targeting growth of 30 percent in its assets under management (AUMs), a level the management finds comfortable to achieve. The company is seeing strong demand from the affordable housing segment, he said.

“When we go down to our branches, we are seeing that there is a lot of movement or migration of people from smaller villages to larger towns and looking for livelihood… These are the people who end up building or buying their first home,” he said. 

Last week, Motilal Oswal Financial Services initiated coverage on Home First Finance with a ‘buy’ rating and a target price of Rs 1,020. The brokerage’s target implies upside potential of almost 18 percent from its closing price on Wednesday.

“Home First has the best productivity metrics among its peers… The company’s strong execution on the asset quality front over the next two years will speak for itself and convince investors further about the quality of this franchise,” according to Motilal Oswal Financial Services.

Home First shares have underperformed the market in the recent past, falling more than seven period in the past one month — a period in which the Nifty50 benchmark has risen two percent.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow