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Motilal Oswal Report
Home First Finance Company India Ltd.'s strategic positioning, coupled with its focus on cost efficiencies and robust capital management, supports a strong loan growth trajectory. Given the company's strong fundamentals, steady return on equity improvement, and stronger loan growth (relative to its peers), Home First remains an attractive investment opportunity in the affordable housing finance segment.
From a technical perspective, Home First now has a free-float market capitalization of ~74%. Private Equity investor exits in Home First have been among the most well-managed, wherein these investors have guided the markets well, instead of keeping investors guessing about the potential supply.
We believe that the current valuation of 2.6x FY27E price/book value is reasonable for a franchise that is very well governed, has a healthy AUM growth trajectory, and best-in-class asset quality. We reiterate our Buy rating with a target price of Rs 1,250 (premised on 3.5x Sep'26E book value per share).
Sustained contraction in spreads due to high competitive intensity in the affordable housing segment remains a key downside risk.
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