HOMEFIRST - Home First Finance Company India Limited Share Price

Management's outlook for Home First Finance Company India Limited remains optimistic, projecting robust growth driven by a strong market for affordable housing. Key forward-looking points include:

1. Disbursement Growth Target: Management targets a disbursement growth rate of 20-25% for FY26, supported by both new branch openings and contributions from existing branches.

2. AUM Projections: The company aims to reach an assets under management (AUM) of Rs. 20,000 crores by FY27 and Rs. 35,000 crores by FY30, confident in achieving these milestones without the need for additional fundraising in the immediate future.

3. Strategic Equity Raise: In April 2025, the company successfully raised Rs. 1,250 crores through a Qualified Institutional Placement (QIP), which will enhance operational capabilities and network expansion.

4. Financial Performance: FY25 closing saw assets under management at Rs. 12,713 crores (up 31.1% YoY) and a profit after tax of Rs. 382 crores (up 25% YoY). The company reported an ROE of 16.5% for the fiscal year.

5. Technology Adoption: Management highlighted the advancement in technology, indicating that 75% of sanctions are now facilitated through account aggregators, and 80% of loans are digitally fulfilled.

6. Cost of Borrowing: The competitive cost of borrowing stood at 8.4%. Management maintains that they will continue to transmit benefits to customers as the rate cuts materialize.

7. Asset Quality: The company boasts resilience in asset quality, with a gross stage 3 assets ratio stable at 1.7% and credit costs contained at around 30 bps.

8. Employee Growth: The company's workforce was expanded significantly, with a net increase of 385 employees in FY25, reflecting a strategic focus on enhancing operational strength.

These points illustrate a proactive approach to capitalizing on market opportunities while maintaining sound financial health and operational efficiency in the affordable housing sector.

Q1: "When we look at the incremental spread, last 4 quarters, spread is declining. How confident are we that we will be able to sustain this 5% to 5.25% range?"

A1: "I'm confident that we can maintain spreads above 5%. Our book runs on a fully floating rate, which allows us to adjust with movement in borrowing costs. Given we're entering a declining interest rate environment, we foresee a reversal in the trend, and thus, we're optimistic about maintaining our margins."

Q2: "Are there any customer segments or geographies where you are seeing stress leading to collection issues?"

A2: "We don't see significant stress in specific segments or geographies. Although bounce rates have increased slightly, early delinquencies have improved. The bounce often reflects behavioral changes rather than financial distress, as many customers pay immediately after a bounce."

Q3: "What is your target for disbursement growth in FY26?"

A3: "We are targeting disbursement growth in the range of 20% to 25% for FY26. It will come from expanding our branches as well as enhancing performance in existing locations."

Q4: "Are you seeing signs of early stress in any states with high growth rates like Madhya Pradesh?"

A4: "No specific stress is noted in Madhya Pradesh or other states. Although growth rates vary, they do not correlate directly with asset quality. We maintain a consistent profile regarding credit behavior across locations."

Q5: "What will be the projected AUM by FY27, and are there any potential risks in achieving it?"

A5: "We are confident in reaching an AUM of Rs. 20,000 crores by FY27, with no significant risks foreseen. Our strategic expansions and operational execution should support this belief."

Q6: "How does your cost of borrowing compare across different lenders?"

A6: "Currently, our cost of borrowing stands at 8.4%. While some larger NBFCs operate at lower rates, it's primarily due to their AAA ratings. We aim to improve our rating over time, which should enhance our cost competitiveness."

Q7: "Is the increase in employee base sustainable, and what hiring plans do you have for FY26?"

A7: "While we've increased our employee base significantly, we expect hiring to stabilize. For FY26, we plan to maintain a moderate growth rate, evaluating hiring in line with branch operational needs."

Q8: "What impact do you anticipate from the new co-lending guidelines?"

A8: "The new guidelines potentially offer benefits, particularly if co-lending model 2 is retained. If not, we expect a more complicated operational process, which we are monitoring closely."

Q9: "Can you clarify your strategies for the LAP business given the lower pricing?"

A9: "Our strategies involve a balance in customer selection and focusing on maintaining conservative loan-to-value ratios. LAP should stay between 15% to 20% of our portfolio, aligning with our overall asset quality management efforts."

Q10: "What are the key takeaways regarding your NPA figures between LAP and home loans?"

A10: "Currently, the NPA for LAP stands at 1.2% to 1.3%, while home loans are at around 1.9%. This reflects our disciplined customer selection and cautious approach in lending, contributing to lower than expected NPAs."