Home First Finance (Home First) is a Bengaluru based technology driven affordable housing financier that targets customers in low and middle-income group. Loans for purchase or construction of homes comprises 92.1% of gross loan assets, as of September 30, 2020. Salaried customers account for 73.1% and self- employed customers account for 25% of gross loan assets. The company also offer other types of loans comprising loans against property, developer finance loans and loans for purchase of commercial property. Gross loan assets have grown at a CAGR of 63.4% in FY18-20 to ₹3,618 crores and ₹3730 crore, as of 30 September 2020. As of September 30, 2020, the company had ~675 employees and a network of 70 branches covering over 60 districts in 11 states and a union territory in India, with a significant presence in urbanized regions in the states of Gujarat, Maharashtra, Karnataka and Tamil Nadu. Active customer base stands at 44,796 and ticket size at ~₹ 10.1 lakh.
Technology driven company with scalable operating model
Home First is a technology driven affordable housing finance company and have built a scalable operating model, which enables them to expand their operations and drive growth in revenue with lower incremental costs. During FY18-1HFY21, the company has invested ₹20.1 crores in information technology systems enabling to digitally capture over 100 data points of a customer in addition to credit bureau data. The Company's information technology systems allow them to leverage economies of scale to increase productivity and reduce turnaround times and transaction costs. The Company's systems are designed to facilitate a sanction within an average turn-around-time of 48 hours, which they calculate from the time they collate all customer information in their database to the sanctioning of the loan.
Priced at P/BV of 3.6x H1FY21 (post issue) on upper band
Home First is a fast growing home financier. Utilizing technology, the company focusses to enhance operational efficiency, return ratios (11%) and asset quality (0.74%). At the higher end of the price band of Rs. 518 per share, the stock is available at a P/B of ~3.6x on H1FY21 BV (post issue).
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