Home First Finance Q2 Results Review - Superior Growth Trends Continue: Dolat Capital

Dolat Capital Report

Home First Finance Company Ltd. reported a good quarter with net interest income growth of 27% YoY/7% QoQ. Further, higher other income and lower opex drove profit after tax growth of 37% YoY. Despite sequential rise in balance transfer-outs, growth trends were intact at 7% QoQ/ 33% YoY.

Reported spreads were lower by 17 basis points QoQ led by lower National Housing Bank drawings (stable in H1 after +17 bps in Q1). Home First Finance's asset quality metrics were slightly weaker with stage-3% at 1.7% (+10 bps) and one plus days past due at 4.5% (+20 bps).

We upgrade earnings by 3-4% for FY24-25E, factoring in higher other income. Rolling over to Sep-25E, maintain 'Buy' with target price of Rs 1170, valuing the stock at 3.8 times price/book value.

The stock currently trades at three times P/BV against return on asset/return on equity of 4%/18%.

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