Home First Finance IPO would open for subscription on 21st January, 2021. Home First Finance company India limited is a mortgage finance company that offers instant home loans. Company claims that it would process home loans within 48 hours. The issue size is Rs 1,153.72 Crores. Should you invest in Home First Finance IPO? What are the risk factors an investor should keep in mind before applying for this IPO? Let me review and provide detailed analysis and news about this IPO in this article.
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About Home First Finance Company India Limited
Home First is in the business of providing housing loans to low- and mid-income affordable home buyers. Home First is a registered HFC and operates from its head office situated in Mumbai. As at March 31,2020, the company has presence across 11 States and a union territory of the country with a network of 68 branches across 60 districts.
Company offers customers home loans for the purchase or construction of residential properties and for the extension and repair of existing housing units.
The Company has grown its Asset Under Management (AUM) from Rs 2,443.57 Crores in the previous year to Rs 3,618.36 crs as at March 31, 2020 recording a growth of 48.1%. This growth has come in mainly from growth in the markets of Bangalore, Chennai, Hyderabad and Jaipur. These markets have grown by 78.7% over last year. This has helped diversify its portfolio and reduce concentration in the States of Gujarat and Maharashtra. They are achieving scale by driving presence in its core states of Gujarat and Maharashtra while also creating new moats in Tamil Nadu, Andhra Pradesh, Telangana and Rajasthan. This has also enabled the business to strengthen its presence in the self-construction business within the housing finance industry. With this, the company now has the knowledge and capability to grow in builder led and self-construction markets.
Home First Finance IPO Details
Here are the IPO issue details.
|Home First Finance IPO – Issue Details|
|IPO Date||January 21st to 25th, 2021|
|Face Value||Rs 2 per share|
|IPO Price band||Rs 517 to Rs 518 per share|
|Issue Size||Total of Rs 1,153.72 Crores
Fresh issue – 265 Crores
OFS – 888.72 Crores
|IPO Lot Size||28|
|Lead Managers||Axis Capital, ICICI Securities, Credit Suisse Securities and Kotak Mahindra Capital|
|Listing at||BSE and NSE|
Download Home First Finance IPO DRHP
Download Home First Finance IPO RHP
Objects of issue
Here are the objects of the IPO issue.
1) Offer for sale (OFS) of Rs 265 Crores: Money received under OFS would go to selling shareholders and company would not receive any proceeds.
2) Fresh issue of Rs 888.72 Crores: Company proposes to utilise the Net Proceeds towards augmenting its capital base to meet its future capital requirements, arising out of the growth of its business and assets.
In addition, the company expects to receive the benefits of listing of the equity shares on the stock exchanges, including enhancement company’s brand name and creation of a public market for its equity shares in India.
Who are the company promoters?
True North Fund V LLP and Aether (Mauritius) Limited are the promoters of the company
Here is the summary of the financial information of the company.
|Total Revenues (Rs in Millions)||Profits after tax
(Rs in Millions)
|6 Months ending Sep-20||2,431.7||529.4||21.8%|
Its EPS for FY2020 is Rs 10.81. If we annualize 6 months ending Sep-20 EPS, it works out to Rs 13.18.
What are the key strengths of Home First Finance Limited?
Every investor should understand the company’s key strengths so that one can compare with its competitors to know how unique is such company in their business. Their investment decision would change based on these facts. Here are the key strengths of the company.
1) Technology driven company with scalable operating Model
2) Customer centric organizational commitment
3) Deep penetration in the largest housing finance markets, with diversified sourcing channels
4) Centralized, data science backed underwriting process
5) Technology driven collections system
6) Well-Diversified and cost-effective financing profile
7) Experienced management team with qualified operational personnel and marquee investors
What are the various strategies of Home First Finance Ltd?
Company strategies would help investors to know what company is intending to do in the future and whether these strategies would help in revenue or margin growth. Such information would help investors to decide whether to invest for short term, medium term or for the long term. Here are the company strategies.
1) Leverage technology to grow business and drive operational efficiency
2) Expand our branch network in large affordable housing markets
3) Grow the productivity of its existing branches
4) Diversify sources of borrowings to optimize borrowing costs
5) Focus on enhancing its risk management framework
Why to invest in this IPO?
Here are a few reasons to invest.
1) Home First Finance is one of the fastest growing mortgage finance company in India.
2) It has generated strong revenue growth in the last 4 years (CAGR 66%).
3) Its margins have improved in the last 4 years (CAGR 128%). It was generating 7.3% margins in FY2017 Vs 19% in FY2020. Its margins for 6 months ending Sep-2020 were further improved to 21.8%.
Risk Factors of investing in this IPO
These risk factors can impact company revenue and margins which would affect its share price. Investors should go through these points and understand them before investing.
1) Disruption in the sources of funding could affect its business
2) Default by borrowers and delay in repayment of loans can affect company business
3) Company would get affected by volatility in interest rates in both lending and treasury operations, which in turn affects the profitability of the company
4) In case credit rating agency downgrades company credit ratings, it would increase the company borrowing costs and this could impact the profitability
5) Company relies significantly in its IT Systems and any failure or security breach can affect its business
6) Company may face asset-liability mismatches which can affect its liquidity and profitability
7) Company major operations are concentrated in Gujarat and Maharastra. Any adverse developments in these states can affect the business.
8) Inside the case company cannot full value of the collateral or cannot collect amounts outstanding for defaulted loans on time, it can affect its business and financials.
Home First Finance Promoter Holding – Pre and Post IPO
Pre-issue share holding – 52.85%
Post issue share holding – 33.7%
Home First Finance IPO GMP / Grey Market Price
Company Grey Market Premium (GMP) is trading at Rs 160 to Rs 165 as on 19th January, 2021.
Home First Finance company Limited – IPO Dates / Timetable (Including Listing date)
|Home First Finance IPO Schedule (Tentative)|
|Finalization of Basis of Allotment||29-Jan-21|
|Unblocking of ABSA and Initiation of Refunds||1-Feb-21|
|Credit of shares to Demat Accounts||2-Feb-21|
|IPO Shares Listing Date||3-Feb-21|
Home First Finance Share price valuations
Here is how the valuations look like. This section would be updated once we hear the news about the final issue price.
1) On the upper price band of Rs 518 and EPS of Rs 10.81 for FY20, the P/E ratio works out to be 48x.
2) If we annualize FY21 EPS based on 6 months ending Sep-20 EPS, the P/E works out to 39x.
3) Means, the company is asking the issue price of Rs 518 of the upper price band in the P/E range of 39x to 48x.
4) There is only one listed peers Aavas Financiers, which is trading at P/E of 61x. While one cannot take single company for comparison, one can assume that Home First Finance IPO Share price at Rs 518 is fully priced.
Also Read: List of Upcoming IPOs in Jan/Feb/Mar-2021
Home First Finance IPO – Should you invest?
Home First Finance IPO news is there for some time and investors have been eagerly waiting for this IPO.
Home First Finance is a fastest growing mortgage lender in India. It has shown strong revenue and margin growth in the last 4 years. Its issue price is fully priced. High risk investors can invest for listing gains as well as for medium to long short term.
FAQs about Home First Finance IPO
1) Is Home First Finance Ltd IPO date confirmed?
Yes. The IPO would open on 21st January, 2021.
2) What is the Home First Finance IPO Size?
This IPO size is expected to be around Rs 1,153.7 Crores.
3) When is Home First Finance IPO allotment?
This IPO allotment would happen on 29th January, 2021.
4) When is Home First Finance listing date?
This IPO would list on 3rd February, 2021. It would be listed on both NSE and BSE.
5) What is Home First Finance IPO retail discount?
This IPO does not offer any discount to retail investors.
6) What is Home First Finance IPO GMP?
Home First Finance IPO Grey Market Premium (GMP) is is trading at Rs 160 to Rs 165 as on 19th January, 2021.
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It’s very usefull for investors, very most help to us for planning investment, well done,,,
Thank you Sivaranjan
Hi Suresh KP,
Thanks for the details. Indeed detailed.
Just one correction, Fresh Issue is 265 Cr and not Offer for Sale. In your OBJECTS OF THE ISSUE, it is mentioned opposite.
Also, are you on Youtube. If not, then you should start doing YOUTUBE VIDEOS.
Hello Rohan, I have verified the data again and it is correct. Let me know the source where you are referring for me to check. Myinvestmentdieas.com is already on youtube, you can click this link to subscribe to our channel https://bit.ly/3c0gWB7
Nice and detailed analysis.
Thank you Kamal ji