Buy Home First Finance Company India; target of Rs 1400: Prabhudas Lilladher

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • AUM growth: Home First Finance Company India (HOMEFIRS IN) is expected to deliver 26% AUM growth in FY27E, driven by stable regional teams and lower attrition. Management reiterated ~25% AUM growth guidance, with upside risks from a pick-up in southern states.
  • NIM compression: NIM (calc.) is expected to compress by 14/17bps to 6.0%/5.8% in FY27/FY28E due to repo-rate transmission, with management guiding a long-term spread of 5-5.25%.
  • Asset quality: Asset quality was steady in Q2FY27, with GNPA/NNPA at 1.7%/1.3%. Management targets holding gross NPA at ~1.7% and credit cost at ~40bps.
  • Operating profitability: Opex/Assets ratio stood at 2.6% in Q2FY27, with management guiding a ~10bps annual reduction.

Thesis Validation Checklist

To validate the thesis, investors should monitor: AUM growth, NIM trends, asset quality, and operating profitability over the next 12 months. Key signals include: (1) AUM growth exceeding 25%, (2) NIM compression being limited to 14/17bps, (3) asset quality remaining stable, and (4) opex/asset ratio reducing by ~10bps annually. These signals will indicate whether the company is on track to deliver its growth and profitability targets.