Home First Finance IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Home First Finance IPO– 10 yr old company promoted by private equity funds.

Business — In the affordable housing segment in 11 states with 70 branches. 80% business from 4 states including 40% from Gujarat only

Offer purpose — Offer for sale (1153cr) including fresh issue of 265 cr. for expansion and general purposes

Key domains – Affordable housing finance for construction , loans for purchasing commercial property and loans against property to both salaried and small business owners/self-employed customers

Risks —

Consistently need to remain in limelight in highly competitive industry, Key financial metrics are not great as of now

With focus on middle class and recent Covid impact , NPA will always be struggle for few quarters

Strength

Focus on growing affordable housing category for middle income and low income category which is not serviced by many big banks

Company use technology to its advantage and do fast processing of loans

Average ticket size is 10 lacs approximately which makes it target highly growing category of loans

Future

Various government initiatives such as housing for all, amongst others are likely to offer exciting growth opportunities in the coming years.

Last three years CAGR is 60% plus although on smaller base shows future seems bright if it remains on track

Valuations

In almost all aspects except PE, Better listed options available

Should we apply?

People can avoid or subscribe only for listing gains

Recommended to sell if getting gains on listing day

One can wait to enter at low prices for investment purposes or choose peers for investment purpose during corrections

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