Home First Finance Company is an affordable housing finance company. The company primarily caters to the low and middle income groups by offering them housing loans to construct and buy homes. It further offers other loans like loans against property, developer finance loans, and loans to buy commercial property. The company has a diverse lead generation source channel including connectors, contractors, architects, affordable housing developers, and others. As on Sep 30, 2019, the business has a strong branch network of 65 branches across 60 districts in 11 different states and a union territory in India with key presence in market such as Maharashtra, Karnataka, Tamil Nadu, and Gujarat. The firm currently focuses on leveraging technology benefits in the area such as processing loan applications, risk management, and managing customer experience. It offers quick and transparent loan transactions through its mobile app. As on Sep 30, 2019, it has serviced a total of 37,086 active loans. Company Strengths 1. Technology-driven affordable housing company.2. Strong penetration in the largest housing finance market.3. Diversified lead source channel.4. Experienced and qualified managerial team. As per financial performance, RailTel has posted total income/net profits of Rs. 1021.22 cr. / Rs. 131.91 cr. (FY18), Rs. 1038.27 cr. / Rs. 135.22 cr. (FY19) and Rs 1166.01 cr / Rs 136.07 cr (FY20). For upto Q1 of FY21, company has posted profit of Rs 57.67 Cr on total revenue of Rs 750.97 Cr. So company has shown exceptional performance. ESFBL has posted an average EPS of Rs. 1.94 and average RoNW of 7.85% for last three fiscals. Issue is priced at a P/BV of 1.25 as per NAV of 26.47 on 30.06.20. As per FY20 earnings, P/E is around 15.42. If we attribute latest annualised earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 16.28. As per RHP, the listed peers are shown in above table. On BRLM's front, three BRLMs are associated with this IPO, and have handled around 25 IPOs in last three fiscals, and from last 10 IPOs, 4 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 14.10.2020 ) As per financials, results are very good, RoNW is 8.92% for last three fiscals and issue looks fully priced with respect to current earnings. This industry is growing at good rate, but current situation is not good for banking sector and next some time will remain very challenging for banking industry. Performance of BRLMs are good. So we give NEUTRAL rating to this IPO and one may invest from long term perspective. As per financial performance, HFFC has posted total income/net profits of Rs. 134.23 cr. / Rs. 15.99 cr. (FY18), Rs. 270.92 cr. / Rs. 45.20 cr. (FY19) and Rs 419.65 cr / Rs 79.24 cr (FY20). For upto H1 of FY21, company has posted profit of Rs 52.95 Cr on total revenue of Rs 243.19 Cr. So company has shown exceptional performance. Home First Finance has posted an average EPS of Rs. 8.51 and average RoNW of 9.8% for last three fiscals. Issue is priced at a P/BV of 4.09 as per NAV of 126.67 on 30.09.20. As per FY20 earnings, P/E is around 57. If we attribute latest annualised earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 43. As per RHP, the listed peers are shown in above table. On BRLM's front, four BRLMs are associated with this IPO, and have handled around 34 IPOs in last three fiscals, and from last 10 IPOs, 4 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 2 are trading below issue price and remaining are trading above issue price. ( As on 19.01.2021 ) As per financials, results are very good, RoNW is 9.8% for last three fiscals and issue looks fully priced with respect to current earnings. This industry ( Affordable Housing Finance ) is growing at good rate, and expected to grow at good rate for next 3-5 years, but this segment is highly competitive due to availability of lot of players like other HFCs, NBFCs, Small Finance Banks and Schedules Banks. Performance of BRLMs are average. It's possible, there may be 10-20% listing gains, but due to higher competition and fully priced valuations, we give NEUTRAL rating to this IPO.
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