Home First Finance IPO: Should you subscribe?

Dates, Price band, Lot size, Risks, Review and broker recommendations etc.
home first IPO

Home First IPO: Key Details

  • Grey Market Premium (GMP) today: ₹105 – ₹120
  • Raised ₹346.12 crores via anchor investor sale of 66,81,766 shares @ ₹518
  • IPO subscribed 26.66 times, overall

Note: We neither trade nor encourage our readers to trade in the Grey Market. We share the GMP information for educational purposes only, so that, you can make an informed decision.

Company Information

Home First Finance Corporation, incorporated in 2010, is a technology driven affordable housing finance company that targets first time home buyers in low and middle-income groups. It primarily offers customers housing loans for the purchase or construction of homes, which comprised 91.5% of its Gross Loan Assets, as of September 30, 2019. They had a network of 65 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.

The company has increased their scale of operations and grew their branches by adopting a strategy of contiguous expansion across regions and have strategically expanded to geographies where there is substantial demand for housing finance. According to a CRISIL
Report, the 11 states and union territory in which Home First is present accounted for approximately 79% of the affordable housing finance market in India during the financial year 2019.

Competitive Strengths

  • Technology driven company with Scalable Operating Model
  • Customer centric organizational commitment
  • Deep penetration in the largest housing finance markets, with diversified sourcing channels
  • Centralized, data science backed underwriting process
  • Technology driven collections system
  • Well-diversified and cost-effective financing profile
  • Experienced management team with qualified operational personnel and marquee investors

Company Strategy

  1. Leverage technology to grow business and drive operational efficiency
  2. Expand the branch network in large affordable housing markets
  3. Grow the productivity of existing branches
  4. Diversify sources of borrowings to optimize borrowing costs
  5. Focus on enhancing the Risk Management Framework

Proceeds from Home First IPO will be used to:

  • Augment the company’s capital base to meet future capital requirements, arising out of the growth of the business and assets

In addition, the Company expects to receive the benefits of listing of the equity shares on the Stock Exchanges, including enhancement of the company’s brand name and creation of a public market for its equity shares in India.

Home First: Financials

201820192020 (Mar)2020 (Sep)
Revenue from Ops1,299.58 Cr2,319.25 Cr3,547.33 Cr2,074.38 Cr
Profit before Tax242.70 Cr651.95 Cr1,072.83 Cr703.58 Cr
EPS (Basic)3.107.8210.776.76

Home First’s Gross Loan Assets have grown at a CAGR of 69.8% between the financial year 2017 and the financial year 2019 and increased from ₹ 8,473.16 million as of March 31, 2017 to ₹ 31,133.76 million as of September 30, 2019.

Price to EarningsBasic EPSP/E
Home First Finance10.7748.90*
LIC Housing Finance47.598.22
PNB Housing Finance38.5410.81
Aavas Financiers Ltd31.8561.41^
Sector P/E21.62
All values are as of Mar 2020, *Based on basic EPS at higher price band, ^Closest Competitor

Home First IPO Dashboard

Issue Details

TypeValue
Issue Size₹1,153.72 Cr.
Fresh Issue₹265 Cr.
offer for Sale₹888.72 Cr.
Face Value₹2/- per Equity Share
IPO Price₹517 – ₹518
Lot Size28 shares
LotsMin 1 – Max 13

Key Dates

Date TypeDate (Tentative)
Bid Open21/01/2021
Bid Close25/01/2021
Allotment Finalization29/01/2021
Initiation of Refunds01/02/2021
Credit of Shares02/02/2021
Listing Date03/02/2021

Lot Size and Price

LotsSharesAmount
128₹14,504
13364₹1,88,552

Promoter Holding

HoldingPercentage
Pre-Issue52.85%
Post – issue33.70%
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Home First IPO: Investor Quota and Shares Offered

Investor TypeQuotaShares on Offer
QIB50%44,63,127*
NII15%33,47,346
RII (Retail)35%78,10,475
Total100%1,56,20,948
*Shares left after anchor investor sale of 346.12 Cr

Home First IPO – Risks

  • Any disruption in the sources of funding could have an adverse effect on the business, results of operations and financial condition
  • The risk of non-payment or default by borrowers may adversely affect the business, results of operations and financial condition.
  • Company is affected by volatility in interest rates for both lending and treasury operations, which could cause its net interest income to vary and consequently affect its profitability.
  • Any downgrade in the credit ratings could increase the borrowing costs, affect the ability to obtain financing, and adversely affect the business
  • Company may face asset-liability mismatches, which could affect the liquidity and consequently may adversely affect its operations and profitability.

For complete internal and external risk factors, you can refer the RHP of the company.

Home First IPO: Registrar and Lead Managers

Registrar of the Issue

KFintech
Selenium Building, Financial District, Nanakramguda, Serilingampally,
Rangareddi, Telangana India – 500 032.

Phone: +91 40 3321 1000
Email:[email protected]
Investor grievance E-mail: [email protected]

Lead Managers of the Issue
  • Axis Capital Limited
  • Credit Suisse Securities (India) Private Limited
  • ICICI Securities Limited
  • Kotak Mahindra Capital Company Limited

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